LIQUIDITY: WHAT IT IS & WHERE TO FIND IT
1/9
LIQUIDITY — THE FUEL BEHIND PRICE MOVEMENT
If you understand liquidity, you start looking at the market differently.
Liquidity can be found around obvious highs, lows, equal levels, previous session levels and trend lines.
Let’s break it down 👇
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2/9 — What is Liquidity?
Liquidity refers to areas where there are likely to be clusters of orders in the market.
These can include:
• Stop losses
• Pending orders
• Breakout orders
• Entry orders
Price often interacts with these areas before making its next significant move.
Know where the liquidity is before looking for an entry.
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3/9 — BSL (Buy-Side Liquidity)
📍 BSL = liquidity above highs
Buy-side liquidity can commonly be found above:
• Previous swing highs
• Equal highs
• Previous day/week/month highs
• Obvious highs
Why?
Traders who are short may place their stop losses above those highs, while breakout traders may place buy orders around the same area.
The obvious high can become a liquidity target.
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4/9 — SSL (Sell-Side Liquidity)
📍 SSL = liquidity below lows
Sell-side liquidity can commonly be found below:
• Previous swing lows
• Equal lows
• Previous day/week/month lows
• Obvious lows
Short traders may have breakout orders around these levels, while buyers may have stop losses below the lows.
The obvious low can become a liquidity target.
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5/9 — Equal Highs & Equal Lows
This is one of the easiest liquidity formations to spot.
Equal Highs (EQH)
→ Similar highs
→ Liquidity generally sits above them.
Equal Lows (EQL)
→ Similar lows
→ Liquidity generally sits below them.
The more obvious the level, the more traders may be watching it.
Don’t automatically enter just because price reaches it.
Watch the reaction.
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6/9 — Previous High & Previous Low
Previous session/day/week/month highs and lows can become important reference points.
Examples:
📌 Previous Day High
📌 Previous Day Low
📌 Previous Week High
📌 Previous Week Low
📌 Previous Month High
📌 Previous Month Low
These levels are visible to many traders, making them useful areas to monitor for potential liquidity.
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7/9 — Trend-Line Liquidity
Liquidity isn’t always sitting at horizontal levels.
It can also form around trend lines.
In an uptrend:
↗️ Traders may place stops below the trend line.
In a downtrend:
↘️ Traders may place stops above the trend line.
The more obvious the trend line, the more traders may be using it as a reference.
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8/9 — Put It All Together
Before taking a trade, ask:
Where is the liquidity?
Look for:
🔹 BSL
🔹 SSL
🔹 Equal Highs / Equal Lows
🔹 Previous High / Previous Low
🔹 Trend-Line Liquidity
Then ask:
What happens when price reaches that liquidity?
A liquidity level by itself is not an entry signal.
Wait for your confirmation.
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9/9 — The Takeaway
Liquidity gives you a map of where orders may be concentrated.
BSL → above highs
SSL → below lows
EQH/EQL → around equal levels
Previous H/L → previous key levels
Trend-line → around obvious trend lines
The goal isn’t to chase liquidity.
Identify it.
Wait for price to interact with it.
Then look for confirmation.
Structure → Liquidity → Point of Entry.
— REALSHUGAHFX
TRADE THE PLAN. BUILD THE TRADER.