JoymistaWhat Is Liquidity in Trading and in SMC?
In general, liquidity is how easily you can buy and sell without moving price much. In SMC it means the cluster of stop and pending orders above highs and below lows.
Explained
A liquid market has tight spreads and less slippage. In SMC, equal highs and equal lows are seen as obvious liquidity, since many traders put stops there, and price often reaches them and then reverses in what is called a liquidity sweep.
Example
Example with made-up numbersTwo equal highs at 150. Price spikes to 150.5, triggering the stops above them, then closes back below 150: a liquidity sweep.
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Related terms
- Market Structure: BOS and CHoCHMarket structure is the order of highs and lows: higher highs and lows in an uptrend,…
- Order BlockIn SMC, an order block is the last opposite candle before a strong move that broke…
- BreakoutA breakout is price closing clearly outside a support or resistance zone; a false…
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Open in JoymistaEducational content, not investment advice.