Lecture Notes: Liquidity, Buy Side and Sell Side Liquidity

Key Concepts

• Liquidity: Refers to the availability of liquid assets in a market or company.
• Buy Side Liquidity: Stops located above market highs that indicate potential buy orders.
• Sell Side Liquidity: Stops located below market lows that indicate potential sell orders.
• Swing Points: Critical in identifying where liquidity is resting.
  • Swing Low: A low with a higher low on both sides.
  • Swing High: A high with a lower high on both sides.

Trader Psychology

• Traders often place stops at swing points:
  • Buying: Stops below swing lows (Sell Side Liquidity).
  • Selling: Stops above swing highs (Buy Side Liquidity).
• Smart money pairs orders below these lows and above these highs.

Identifying Liquidity on Charts

• Swing Points Identification: Determine obvious highs and lows.
  • Example: On a 4-hour chart, locate swing lows and highs for sell and buy side liquidity.
• Price Action: Recognize price taking out swing points and forming new ones.

Types of Liquidity

• Old Highs and Lows: Previous swing points that stand out.
• Relatively Equal Highs/Lows: Clusters of swing points close together.

Important Liquidity Levels

• Previous Week's High and Low: Useful for framing reversals or predicting liquidity draws.
  • Example: Previous week's highs/lows marked for potential expansion higher.
• Previous Day High and Low: Used for framing reversals or draws.
• Session Highs and Lows: Important for forming narratives, draws, or reversals.
  • Asia Session: High and low points.
  • London Session: High and low points.
  • New York Session: Use these for market entry and exits.

Practical Examples

• Session Analysis: Use session highs and lows in conjunction with previous day/week levels to forecast market moves.
  • Example: New York session using London session lows and highs for targeting and entry points.

Tools and Resources

• Indicator: A free liquidity tool was used in the lecture for demonstration and is available for download.
• Discord: A free community Discord for discussion and learning.
• PDF Document: Available for further reading, linked below the video.

Conclusion

• Using liquidity levels effectively can aid in predicting market actions and optimizing trade strategies.
• Always mark critical liquidity levels and analyze market swings for better forecasting.

Note: Additional resources and links are typically provided for further study and engagement.