📘 What Is Liquidity in the Crypto Market?
Liquidity is one of the most important concepts in crypto trading, yet many beginners ignore it.
🔹 What does liquidity mean?
In simple terms, liquidity refers to areas where a large number of buy or sell orders are placed. These are usually found:
Above recent highs (buy-side liquidity)
Below recent lows (sell-side liquidity)
🔹 Why does the market move toward liquidity?
Big players (institutions, market makers) need liquidity to enter or exit large positions.
Price moves toward these zones to trigger stop-losses and pending orders.
🔹 Liquidity vs Trend
The market does not move randomly
It moves to collect liquidity first, then continues or reverses
Many “fake breakouts” happen because price is grabbing liquidity
🔹 How traders can use liquidity:
Avoid placing stop-losses at obvious highs/lows
Wait for liquidity to be taken before entering trades
Combine liquidity with market structure for higher accuracy
📌 Understanding liquidity helps you stop chasing price and start thinking like smart money.
