Definition
"What is liquidity? Liquidity refers to the degree to which a market or asset or security can be quickly bought or sold in the market without affecting the assets price dramatically." (0:29-0:39)
ICT Liquidity Concept
"Liquidity as it relates to ICT concepts it relates to buy orders and sell orders. It's as simple as that." (1:09-1:15)
Time Frame Independence
"When we look at price it doesn't matter what time frame you're looking at. Time is irrelevant for right now." (0:41-0:47)
Reference Points & Fundamental Understanding
"We as price action traders we're looking specifically for reference points where we can hone in on where there is a high probability of liquidity resting in the marketplace." (0:55-1:06)
The Fundamental Rule
"Our first fundamental understanding is that there's going to be liquidity above old highs and below old lows." (4:08-4:14)
Market Targeting
"When we understand that we can see that they will eventually target these same levels, moving price just above the previous high, knocking out the liquidity that would be resting just above those highs in the form of buy stops." (4:17-4:32)
"The low old lows the market will seek liquidity for the sell side or the sell stops, taking those orders out." (4:35-4:43)
Structure & Pattern
Swing High Setup
"When we have a swing in the marketplace as we note here and the market trades lower, our understanding is there is someone that went short here. This position would be net positive or profitable as the market moves lower." (1:18-1:34)
"Our understanding is if there's a short position or traders that are bearish on the marketplace if they have positioned a profitable trade here and moved lower, their stop loss order would be resting right above this high or generally many times just rate at that high." (1:50-2:07)
Swing Low Setup
"As the market finds these lows down here, as the market rallies away we are our understanding is that there's going to be buyers that have positions that are net positive or profitable as it trades higher." (2:22-2:35)
"At some point when the market starts to trade back down lower, back into the area in which the buy orders would have originated from, their open profits would be eroding until eventually moving into this area here it would be at a net loss position." (2:37-2:56)
What We're Actually Targeting
"Essentially what you do is you're targeting areas at which the market has already seen a willingness to go higher or lower. In this case we see a swing high and the market moves lower. We view that as a smart money trader or as a market maker perspective we know that there's going to be buy stop or buy liquidity above that high." (3:13-3:34)
"When we look at the lows when the market moves away from these lows we see that as sell liquidity." (3:37-3:42)
High Resistance Liquidity Run
Definition and Characteristics
"When we see the market give this very thick area of resistance okay it's a lot of price action that the market has to trade through to get back to an old high of significance, we view this as a high resistance liquidity run." (7:22-7:37)
"The market's going to have a very hard time getting through all these previous lows and previous highs just to run out the liquidity that will be resting above this old high." (7:38-7:47)
What It Takes to Break Through
"It's going to take a very sharp economic market release the data kind of like non-farm payroll or FOMC that type of event will knock through all of these levels of resistance to run out that liquidity but generally without that type of influence or injection of volatility these old highs generally are well defended." (8:33-8:51)
Trading Perspective
"This is the least probable trading condition to look for longs because you have so many levels of resistance and old highs to encounter before you get back to the old significant high." (7:59-8:11)
"For shorts we avoid these types of occurrences." (10:38-10:41)
Same Applies to Downside
"Obviously the opposite can be said when we see the market make a low of some kind... the old low would obviously have sell stops below it or sell liquidity and as the market makes higher highs and higher lows if we're seeing price action right here we can't reasonably expect the market to just drop straight down and make a run on the sell stops below this low without encountering first all of these higher lows and higher highs as the market went higher." (8:57-9:31)
"It's going to be very difficult for price to reach down through all of this price action and the more time it's spent in this area again the more unlikely it is to make a market move all the way down to this old low." (9:55-10:06)
Low Resistance Liquidity Run
Definition and Characteristics
"Obviously that comes by way of trading in low resistance liquidity runs." (11:19-11:23)
"If we see the market come off the old high okay and it comes down rather quickly. If there is a very sharp or one-way type direction very little retracements of any kind when we see this okay..." (11:44-11:58)
Range Definition - Bullish Low Resistance Run
"Once that market breaks below an old low from that point at which it breaks the old low until it gets through a short term high in other words the market comes down makes a low here starts to trade off comes down makes a higher low, once it starts running through if we get a market break through this short-term high, this run here begins its climb back up into the range that's created by this low being broken so it's being defined by this level here all the way down to this high." (12:02-12:40)
"Once it's broken this area of price action is deemed low resistance." (12:43-12:48)
Continuous Low Resistance Opportunities
"Now every time that a new short-term high is formed before this low is retreated to or retested as resistance every time there's a new short-term high what's going to form above that short term high? It's going to have buy stop liquidity so buy side liquidity is going to be above these old highs. If we get a buy signal after a retracement we know that there's going to be very little resistance for that move to go higher running out the buy stops just above these short-term highs." (12:51-13:24)
"As we get closer to coming up into hitting this low that's been violated here then we start encountering high resistance liquidity runs so the probabilities fall off precipitously once we get back to the area which the range is defined in terms of low resistance then it becomes a high resistance liquidity run." (13:26-13:50)
The Easiest Trading
"This expansion okay that's the easiest part of trading when we can trade inside that range so every time we create another short term high in here if we get a buy signal that buy signal will have very little resistance to get through the old high that it retraced from and you continuously look for those until you fill in that break on this old low." (14:03-14:27)
Range Boundary = Resistance Change
"Once it gets back to this old low over here the market goes into what is referred to as a high resistance liquidity run. Anything higher than this price point here becomes a high resistance liquidity run." (14:28-14:38)
Bearish Low Resistance Run
"This is a sell side of the marketplace low resistance liquidity run. We have a consolidation in here the market expands goes into expansion it breaks above a short-term high so at the moment the short-term high is broken here market structure is bullish and then we go into a real quick run-up. The market will create a high start to break down and once the market starts trading below an old low the market will have a very easy time trading back down into the point which the short-term high was broken on the upside." (15:00-15:33)
Defining Characteristic
"So all this one-way direction price action where all of it looks this one-sided for buys only very little retracements this is the easiest time to trade in the marketplace right in here. It's defined by the short-term high that's broken on the upside here that's where you would begin your point which it's deemed a low resistance liquidity run so you're focusing primarily on selling short." (15:36-15:57)
Real Examples from Charts
Low Resistance Run Example
"We have an old high back here noted here and the market starts to move lower... Notice there was very little resistance in the marketplace where this high eventually traded lower taking out the liquidity resting below these lows here. This run from this high taking out these lows is referred to as a low resistance liquidity run because we have a longer term high to the left of us and the market has shown a willingness to take out a low." (17:15-17:47)
Hot Knife Through Butter
"The fact that we keep this old high in place and every low that forms has very little resistance as each time it moves through it's like a hot knife through butter very little resistance down. Every time a low is formed price goes through those lows." (19:22-19:40)
Trading Focus
"So the the bias is bearish so you want to be focusing primarily on a market rally to take out short term lows or intermediate term lows." (19:48-20:00)
"The difference between that is every rally is going to be viewed as a high resistance liquidity run it's going to have very difficult time getting above the previous highs sometimes it will happen but generally you're going to find that it's going to have a very difficult time doing that." (20:02-20:15)
"But because that's built into price action having a high resistance liquidity run here it turns into a low resistance liquidity run for you to see a move below the short-term lows every short-term low is an opportunity to seek liquidity or the market to expand down after a retracement up to take out the stops that rest below the marketplace at every old low." (20:16-20:42)
Support and Resistance Reversal
"We've changed the tide here and we made an old low so every time the market retraces lower that sets up new buying opportunities to take out the short-term highs or immune term highs above the marketplace because what's going to be resting above those highs? Buy stops and you want to be buying low and selling to willing buyers above the current market action and that's what the market makers do." (22:43-23:03)
"The resistance levels are going to be very weak. The support or lows are going to be very strong because the market's going to be capitalizing only on the buy side." (22:18-22:29)
"Just the reverse of what we saw over here on the sell side everything's going to be supporting bearish prices so every retracement higher sets up another price leg to go lower aiming for the lows to be violated." (22:30-22:41)
Market Psychology & Logic
Why Liquidity Matters
"The market tends to find an interest in going back to where that large body of interest or what we call liquidity in the marketplace it would be by liquidities." (2:08-2:20)
Not Looking for Patterns
"When we look at when we look at price the idea is we're not looking for specific patterns for the sake of patterns we're looking at where existing orders will reside." (2:57-3:09)
Removes Retail Perspective
"Understanding this premise when we view price action it removes all of the retail minded perspective but heavily leaning on indicator based ideas." (4:47-4:58)
Truest and Purest View
"When we adopt these principles with study of price it gives us the most truest purest view of how price is." (4:59-5:09)
Price Relative to Price
"We have no confidence or direct relationship to our directional bias on price relative to anything except for price itself." (5:10-5:19)
"If the market's moving from an old high we know that there's going to be liquidity resting above that old high. If the market's moved from an old low we know there's going to be resting liquidity below those lows. It's just that simple." (5:20-5:31)
Defended Levels
"At some point you're going to look at price action and it's going to be very crystal clear that the more price action there is around a specific level or a high or a low that is indicating a levels being defended on an institutional price model." (24:16-24:35)
Trading in Sync
"So you're going to see very easy trading when you trade away from that level and by doing that you're going to be getting yourself in sync with the institutional order flow then your trades will find very low resistance in the form of profitable exits and very little draw down." (24:36-24:51)
Market Maker Perspective
"Every time the market trades down it's actually just a new low resistance liquidity run to make a run above an old high and it makes it very easy to find trades this way." (23:05-23:16)
Study & Review
Click each card to reveal the answer (direct quotes from transcript)