---
title: 'Liquidity Concepts Explained: Best Strategies Revealed'
source: 'https://youtube.com/watch?v=9ENIonag6N8'
video_id: '9ENIonag6N8'
date: 2026-08-05
duration_sec: 801
---

# Liquidity Concepts Explained: Best Strategies Revealed

> Source: [Liquidity Concepts Explained: Best Strategies Revealed](https://youtube.com/watch?v=9ENIonag6N8)

## Summary

This video explains a professional trading strategy centered on the concept of liquidity, breaking it down into four simple steps for beginners. It covers identifying breaks of structure, supply and demand zones, liquidity levels, and trade entry, with practical chart examples and an advanced variation. The tutorial emphasizes understanding the underlying rules rather than memorizing price patterns.

### Key Points

- **Strategy Overview** [00:02] — The video introduces a professional trading strategy based on liquidity, simplified for beginners. It promises to teach the exact strategy used by professionals.
- **Liquidity Defined** [00:15] — Liquidity refers to areas where pending orders (buy and sell) are placed. Every price level has liquidity because traders constantly place orders, but some levels have more liquidity than others.
- **Why Stop-Losses Get Hit** [01:09] — Large capital intentionally targets resting liquidity below support levels, absorbing stop-losses to fill their own positions. This causes price to wick through key levels before reversing.
- **Best Timeframes and Assets** [02:16] — The strategy works best on lower timeframes like 5-15 minute charts and can be applied to forex, crypto, or stocks.
- **Four Steps Overview** [02:28] — The strategy is broken into four connected steps: 1) Identify break of structure, 2) Identify supply/demand zone, 3) Find liquidity level, 4) Enter trade.
- **Step 1: Break of Structure** [02:41] — In an uptrend, a break of structure occurs when the previous high is broken and a new higher high forms. In a downtrend, it's when the previous low is broken and a new lower low forms. Wicks alone don't count; the close must break the level.
- **Step 2: Supply and Demand Zones** [03:46] — Supply and demand zones are areas where large orders were placed, causing sharp moves. To find them, look at the starting point before the sharp move that led to the break of structure. The area before an upward move is a demand zone; before a downward move is a supply zone.
- **Step 3: Liquidity Levels** [04:47] — Liquidity levels are areas with many stop-loss orders, such as double bottoms, triple bottoms, or multiple rejections. These become targets for stop hunts.
- **Step 4: Entering the Trade** [06:04] — Place a limit buy order on top of the demand zone, stop-loss slightly below, and take-profit at two times the stop-loss distance or at previous highs. For shorts, place a limit sell at the bottom of the supply zone, stop-loss above, and target previous lows.
- **Focus on Rules, Not Patterns** [06:41] — Don't try to find exact price movements; instead, focus on the key rules: a liquidity level near a supply/demand zone and a break of structure. This is like understanding the rules of a triangle pattern rather than memorizing the shape.
- **Example in Downtrend** [07:22] — In a downtrend, identify break of structure, mark supply zone, find liquidity level below it (e.g., multiple wicks), then enter short with limit order at supply zone, stop-loss above, and take-profit at previous lows.
- **Advanced Setup Introduction** [08:56] — The basic setup is only the beginning. An advanced version uses a minor supply/demand zone as liquidity instead of a typical rejection pattern.
- **Major vs Minor Zones** [09:50] — A zone is major if the break of structure came from a large obvious price swing; minor if from a small short-term move. The ideal setup is a minor zone sitting just above a major zone (for longs) or below (for shorts).
- **Advanced Example (Uptrend)** [10:16] — In an uptrend, find a minor demand zone above a major demand zone. Enter long when price sweeps the minor zone and bounces off the major zone. Set take-profit at previous highs.
- **Advanced Example (Downtrend)** [11:23] — In a downtrend, find a minor supply zone below a major supply zone. Enter short when price sweeps the minor zone and rejects off the major zone. Target previous lows.
- **Sponsor Segment** [12:30] — The video promotes Blow Fin, a crypto exchange, offering bonuses up to $100,000 in futures bonuses for deposits and trading volume. This is a sponsored segment.

### Conclusion

The video teaches a liquidity-based trading strategy in four steps, emphasizing understanding rules over patterns. It also introduces an advanced variation using minor zones as liquidity. The strategy is presented as powerful and applicable across assets, with a sponsor segment at the end.

## Transcript

strategy used by professional traders. Yet, I'm breaking it down so simple that anyone, even total beginners, can follow. So, if you want to learn the strategy that professional traders actually use, this is it. Now, let's
dive in. So, the strategy revolves around one key concept, liquidity. But what exactly is liquidity? In simple terms, they are areas where pending break this down with a practical example. Imagine you're looking at a
at a certain price level. What you're actually doing here is providing level. You're basically telling the market, "Hey, I'm willing to buy at this exact price." The same principle applies when you place a sell order. You're
basically telling the market, "Hey, I'm willing to sell at this exact price, which also creates liquidity at that level." In most markets, liquidity is present at every price level because millions of traders are constantly
These could be retail traders, big banks, or financial institutions. So, at any price point, there's always a market participant willing to buy, and there's sell. That's the whole concept of liquidity, and it's what makes the
markets move every day. However, there are certain price levels where there's more liquidity than others. For example, let's say there's a support level on a chart where price is bounced off twice. As price approaches that level again,
when they see this setup? They'll expect another bounce. So, they'll enter a long their stop loss just below it. If they're more cautious, they might place out easily. Now, you've probably experienced this before. Instead of
support just enough to trigger the stop-loss only for it to reverse and wondering why the setup failed. The reason this happens is because lot of capital, intentionally target the resting liquidity below that support.
They know that a lot of retail traders are watching the same pattern and are placing stop- losses in the same zone. This creates a lot of liquidity in that area. So by taking those stop losses out, they absorb the liquidity needed to
fill their own long positions. That's why you often see price wicking through a key level before reversing. And so I'm going to teach you how to be in the 1% of traders who takes advantage of this so you don't end up like the 99% who
gets stopped out. And just so you know, this strategy works best on lower time frames like the 5 to 15-minute chart. And it can be used on any asset, whether it's forex, crypto, or stocks. Let's begin. So, first, to simplify
everything, I'm going to break down the strategy into four simple steps that you these steps are connected to one another, meaning if you skip any of them, you can't proceed to the next one. So, let's begin. Step one is identifying
something called a break of structure in price. To do this, we first need to understand how trends actually form. So, we all know there are two types of downtrends. Let's take an uptrend for example. During an uptrend, the markets
rarely move straight up. Instead, it moves in a structured way, forming what's called higher highs and higher lows. On the flip side, during a price forming lower highs and lower lows. [music] Now in an uptrend
structure whenever the previous high gets broken and price forms a new higher high that's what we call a break of structure. Similarly in a downtrend whenever the previous low gets broken and price forms a new lower low that's
that you have an idea of what a break of structure is. Let's look at a real chart example. In this chart we can see that price is forming higher highs and higher lows indicating an uptrend. To find the break of structure, we simply look at
the moment price broke above the previous highs and formed higher highs, which is right here. So, this becomes our break of structure. Now, it's actually close above the previous highs for it to count as a break of structure.
So, wicks alone don't count. Once a break of structure is identified, we can move on to step two, which is identifying a supply or demand zone. These are areas where large buy or sell orders were placed in the market causing
a sharp move in price. The easiest way to find these zones is to first spot a break of structure. Then look at the starting point before the sharp price structure. The area right before the sharp move upwards is called a demand
zone. Similarly, in a downtrend, the area right before the sharp drop that led to that break of structure is called a supply zone. Returning to our original example, since we've already identified a break of structure, finding the demand
zone becomes easier. We look at the area right before the sharp move that led to that break of structure. In this case, price began its sharp move upwards at this point. To mark the demand zone, highlight the last candle right before
that sharp move. Use the rectangle tool to draw a zone from the candle's low to its high. This marked area becomes our demand zone. Now that we've identified a demand zone, we move on to step three, which is finding a liquidity level. And
this is the most important step in the entire strategy. To put it simply, liquidity levels are areas where a lot of stop-loss orders are placed. Examples of liquidity levels are double bottoms, triple bottoms, or even multiple
rejections from the same level. The point [music] is, when a level looks too enter long positions there and usually This causes a buildup of liquidity under that level, which becomes a target for
stop hunts. So, what we're trying to find is any type of liquidity level What usually happens is that price will break below that level, sweeps the liquidity below it, and then bounces off our demand zone. This bounce becomes our
long opportunity. The same logic applies in a bearish structure. What we're located below our supply zone. What usually happens is that price will break above that level, sweeps the liquidity above it, and then rejects off the
supply zone. And that rejection becomes our short opportunity. Now, back to our original example. Since we've already marked our demand zone, the next step is to find a liquidity level sitting above it. And here we can see that price
formed a double bottom, rejecting the same level twice, which creates a pool of liquidity below that level. Once a liquidity level is identified, we move on to the final step, which is entering the trade. Entering the trade with this
strategy is simple. We place a limit buy order on top of the demand zone, place a stop-loss slightly below the zone, and set a take-profit at two times your stop-loss distance. Or if you want to be more aggressive, you can target the
previous highs as your take-profit. Now, a limit order means you're not entering the trade at the current price. Instead, you're entering at your desired entry price along with your stop-loss and take-profit targets. This way, you don't
day waiting for the entry. Simply set a limit order, and let the price move. In this example, price actually broke below the liquidity level, wicks into our entry, and then reverses back up, hitting our take-profit target. Now,
this strategy might seem hard at first, as many conditions need to come together about spotting a few key rules. A liquidity level formed near a supply or trying to spot a regular chart pattern. For example, in a triangle pattern,
you're not trying to find this exact price movement because price don't move like this in a real chart. Instead, you're focusing on the rules that make the converging trend lines. It's the same with our liquidity strategy. Don't
try to find this exact price movement on a chart. Instead, focus on the key rules that make up the pattern, a liquidity level that formed mere a supply or to understand these rules and not just memorizing the price sequence. Now,
let's look at another example. So again, the first step is to find a break of structure. Looking at this overall chart, we can see that price is forming lower highs and lower lows showing a clear downtrend. And right
here we can spot a break of structure as price broke below this low and formed a new lower low. We can also spot another break of structure here as price broke the previous low. Once the break of structure is identified, we can move on
to step two, which is identifying a supply or demand zone. Since this is a downtrend, we'll be looking for a supply zone. To do that, we take the most the starting point right before the sharp move down that led to that break
of structure. In this case, it's right here. So, we mark our supply zone. Next, we move on to step three, which is finding a liquidity level below that supply zone. Here, we can see multiple wicks rejecting this level, making it an
area of liquidity. This makes it a target for a liquidity sweep. So, we now level sitting right below it, making this a valid liquidity pattern. Now, we step, which is entering the trade. Since this is a downtrend, we're looking to
short the market, meaning we make a profit if price goes down. For the bottom of the supply zone. Set a stop-loss slightly above it and set a take-profit target at the previous lows. Then, simply let the trade run. In this
level, hits our entry at the supply zone, and then rejects downward toward our takerit. So, this is one of the most powerful strategies you can learn, and it's the exact same one that helped me earn $500 per day just by finding this
one setup daily on lower time frames like the 5 or 15 minute chart. The best part, it works on any asset. Sometimes I use it on forex, crypto, or the stock market. Now, the liquidity setup I just showed you is only the basic version of
advanced setup. And knowing this can help you even more if your goal is to achieve $500 per day. So, let's dive into that right now. The way this setup works is first, just like in the basic version, we start by identifying a break
of structure. This allows us to mark a supply or demand zone by looking at the initial sharp move that led to the break. The key difference in this level. Instead of being a typical rejection pattern like a double bottom
or triple bottom, the liquidity is formed by another demand zone instead structure. However, this second zone must be a minor demand zone slightly different from the major zone found below it. So, how do we know whether a
supply or demand zone is considered major or minor? Simple. We look at the break of structure that formed after. If the break came from a large obvious price swing, it's a major zone. If it came from a small short-term move, it's
a minor zone. For this strategy, the ideal setup is when we have a minor demand zone sitting just above a major demand zone. That minor zone becomes our liquidity level and we look to enter a long trade once price sweeps the
bounces off the major zone right below it. So, let's look at an example. In this chart, we can see that price is forming higher highs and higher lows clearly in an uptrend. Right here, we see a break of structure, which means we
can draw our demand zone at the initial move before that break, which is right also spot another break of structure just above. Meaning, we can draw another demand zone before the initial move that
led to that break. Since that break came from a small price swing, we classify Meanwhile, the zone below was formed from a large price swing, which makes it a major demand zone. So, now we have our ideal setup, a minor demand zone sitting
just above a major one, giving us a valid liquidity setup. For the entry, we place a limit long order at the top of the major demand zone, a stop-loss slightly below it, and a take-profit target at the previous highs. In this
few times at the minor demand zone before breaking it. Retested the major demand zone which triggers our entry and then bouncing up to hit our takerit. A clean and successful trade. So, let's look at another example. In this chart,
we can see that price is forming lower highs and lower lows, clearly showing a downtrend structure. There are also multiple breakup structures that could most recent one, which is right here. From that break, we take the initial
move that led to it and draw our supply zone. Looking closer, we can also spot from a smaller price swing. This lets us draw a second supply zone. And since it was formed from a smaller move, we classify it as a minor supply zone. In
contrast, the zone above was formed from a larger price swing, which makes it a major supply zone. At this point, we now have a minor supply zone sitting just below a major supply zone, giving us a valid liquidity setup. So for the entry,
we place a limit sell order at the bottom of the major supply zone, set a stop-loss slightly above and target the previous lows for take profit. As we let the price play out, we can see that it showed rejection towards this minor
supply zone, further confirming that this is a strong liquidity level, breaks our entry at the major zone, and then drops toward our take-profit. Another clean and profitable trade. And that was a full tutorial on the liquidity
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