LIQUIDITY: THE INVISIBLE MAGNET OF PRICE IN TRADING 💶📊🔥
Many traders believe that price moves randomly, but that is not the case.
Price almost always moves towards areas where there is liquidity, because that is where large orders can be executed smoothly.
1. What is liquidity?
It is the area where there are many pending orders, such as:
• Stop-loss
• Take-profit
• Limit orders
• Liquidations in futures
Where most people place orders, that is where liquidity concentrates.
2. Why does price head towards those areas?
Because large players need volume to execute large orders.
Liquidity allows them to buy or sell without causing extreme movements or severe slippage.
The market seeks liquidity just like a magnet seeks metal.
3. Signs that an area has liquidity
• Equal highs and lows
• Obvious stops placed by retail traders
• Areas where price has bounced several times
• High liquidations detected in on-chain analysis
4. How to take advantage of this in your trading?
• Avoid entering just in too obvious areas
• Wait for the price to clear liquidity
• Enter after manipulation
• Mark the highs and lows where most would place their stop
Conclusion
Price does not move by luck.
It moves seeking the areas where the money is.
Once you understand liquidity, you will truly understand the market.
$BTC #Liquidez #PriceAction #TradingCripto
