---
title: 'What is Liquidity? - How to Trade ICT Concepts'
source: 'https://youtube.com/watch?v=6SGzWB8X7dI'
video_id: '6SGzWB8X7dI'
date: 2026-07-05
duration_sec: 0
---

# What is Liquidity? - How to Trade ICT Concepts

> Source: [What is Liquidity? - How to Trade ICT Concepts](https://youtube.com/watch?v=6SGzWB8X7dI)

## Summary

This video provides a beginner-friendly introduction to the concept of liquidity in trading, explaining how to identify buy-side and sell-side liquidity on charts and use it to anticipate price movements. The presenter demonstrates how swing highs and lows act as liquidity zones where stop losses cluster, and shows how sweeping these levels often leads to reversals or continuations.

### Key Points

- **Definition of Liquidity** [00:02] — Liquidity refers to swing highs and lows on a chart. These are areas where stop losses are placed by traders in opposing positions, making them targets for price to 'sweep' before reversing.
- **External vs Internal Liquidity** [01:19] — External liquidity is the highest high or lowest low of a range, while internal liquidity are intermediate highs/lows within the range. Both act as magnets for price.
- **2022 Model Setup** [01:47] — After sweeping sell-side liquidity, look for displacement higher, a pullback to a fair value gap (FVG), and then a continuation to buy-side liquidity. This is called the 2022 model.
- **Low Hanging Fruit Target** [03:35] — The initial high or low after a liquidity sweep is often the first target (low hanging fruit). Take partial profits there.
- **Equal Lows as Magnets** [06:13] — Equal lows (or highs) act as strong liquidity magnets. When price sweeps them, expect a reversal back the other way.

### Conclusion

Understanding liquidity—where stop losses cluster—helps traders anticipate price movements. By identifying external and internal liquidity levels and using the 2022 model (displacement, FVG pullback, continuation), traders can find high-probability setups.

## Transcript

to be going over an introduction to liquidity what is liquidity how do we you know find it on our charts how do we use it to our advantage so just going to jump in I want to talk about what exactly is liquidity now when we're
lot of the times what we are referencing is any sort of you know swing high or swing low now you might be wondering you know why why is that liquidity well logically speaking if anybody is in some sort of short position if we're looking
at you know this kind of 15 minute chart here on yes if anybody's in some sort of short position most of the time they're going to put their stop loss at any sort of significant high so marking out our significant high of the
range we can see this now becomes our buy side now all of buy side is sort of resting Above This level right because this is where everybody is placing their stops right now if I'm in a short position all
everybody would get stopped out right now what would be my sell side of this range now my sell side would be right here because this is the low of this range right so anything below this area
there's something that we like to call external versus internal liquidity now looking at this specific range this is our external buy side and our external cell side right looking at this kind of chart here what can we what kind of
looking at this market right here if we go to the left a little bit we can see that we had a low put in here sell side liquidity Side what do we expect to see after we sweep South Side we look for some sort
of reversal right so looking at the 15 minute here sell side gets swept and we have instant displacement backup now what can we expect this is where we look for our 2022 model which is some sort of
displacement higher and pull back to some sort of fair value Gap to then go higher you can see we have a five minute fair value Gap once we sweep this sell side level where can we expect to go possibly back to buy side
wait for pullback back to discounted fair value Gap enter long you can see this was a nice possible long setup where we come back into discount we Value Gap and then we can see this High getting met right after that so this
what can we expect after this right so what would be another internal buy side level right this would be external we have internal buy side here what happens after we sweep this right big move up and then displacement right
back inside this range what can we expect to see whatever that recent low side level is which is this buy side if we get displacement back inside this
range right looks like markets fail to go higher here if we get displacement markets to go to whatever that previous low is and then this becomes our sell side right again right here we have a low here what can
we expect to see after the sell side levels taken a run-up back to buy side so what do we look for this is where we look for our 2022 model we look for displacement backup you can see we have a market structure shift right here
big displacement pull back to fair value Gap this is where your long entry would be you could set your your targets along the way most of the time I like to take off so my position at that initial high
low hanging fruit is this initial High let's look at some more examples alright looking at this range we want to Mark out our buy side and sell side levels our external levels right external would be that external High
and this would be our external sell side level right now a lot of the times these levels might not get taken right for us to take our internal levels as well so let's mark out our internal cell side you can
see we had this low here what do we expect to see after this low gets taken some sort of buy back to the upside you can see we Zoom back if we zoom into a smaller time frame you can see we get
displacement back up what do we look for a fair value Gap and discount pull back to discounted fair value Gap and you could have seen this would have been a valid long to go higher let's look at another example here let's mark
out our external levels we can see we this would be our buy side now what do taken we could expect to see whatever our sell side is and at this point in time this would be the most recent low that we've created and this would be
can see all of these internal levels as well you can see internal liquidity gets swept right here up what can we expect to see buy side internal buy side would have been here
that external level now what can we expect to see after that external level is taken well we could see sell side so let's see let's zoom in looking at the five minute you can see this was our buy side on the external being swept we get
big displacement back inside this range what do we look for Discount fair value you can see if I draw my FIB in from the high to the low you can see we retraced back into discount this is where your short would be your low hanging fruit
first Target would be that initial low your second target would then be that external sell side liquidity level that then gets taken right here you can see liquidity we always are targeting liquidity right so being able to
the displacement understand how to use it to your advantage that's going to be same thing what do we expect to see after South Side look so we come down all of these cell stops are now getting triggered and then we get an instant
push right back to the upside let's look at another example here looking at the 15 minute where does our buy side rest our external High where would be our external sell side this low here
side level this right here notice equal lows we always want to mark an equal lows and we know equal lows are going to act as a magnet so what do we expect after these equals get taken buy back up what do we look for Market structure
shift you can see five minute break here pull back to that fair value Gap you can nice run up pull back one more time and then we get a run up to that buy side level right another example we have clear external
buy set above us clear cell side below us here we go come down sweep these lows right all those cell stops are now getting triggered what can we expect bounce back up right one more example here looking at the charts where can we
external buy side we have some internal buy side here as we have some internal buy side here as well level being swept here right what do we expect after seeing this loss being
swept notice we have a low being swept are now being triggered we can see we get a big move back up to take out that previous high so hopefully you guys learned something from this this is sort
understanding liquidity how to recognize it didn't want to you know over bunch of words or you know examples so understand how to use them a little bit better and recognize you know what might
be the draw liquidity especially I plan on making a more in-depth video on the draw on liquidity specifically but hopefully this gave you a little bit of a better idea on what liquidity is and how to use it to your advantage so well
leave a like subscribe comment as always and I'll see you guys in the next one and I'll see you guys in the next one peace