Understanding Liquidity Sweeps
Stop Hunted? Understanding the Liquidity Sweep.
Ever wondered why the market dips just enough to trigger your stop loss, only to immediately reverse in your intended direction? This image is the visualization of that 'Golden Hand'—Smart Money capturing liquidity.
Retail traders often place stops right below obvious support levels. Institutional algorithms look for these clusters of liquidity (the red and blue crystal fragments in the image). They push the price down rapidly to activate those sell orders, filling their own large buy orders at the lowest possible price.
Actionable Insight: Don't place your stop-losses exactly at obvious support. Instead, place them below the structure where the thesis is truly invalidated. Better yet, wait for the 'sweep' (the dip and quick recovery) to confirm the trade entry.
👇 Have you ever felt like the market specifically targeted your stop loss? Tell us your experience!
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