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Aug 24 8 tweets 9 min read Read on X
If you can’t identify the Liquidity- You will be the Exit Liquidity🩸

In this thread, you will learn about all 6 forms of liquidity without having to purchase a mentorship course from any influencer ever again🧵 Image
1. Range Bound Liquidity:

Understanding how price moves within and around trading ranges is key to making smart decisions and avoiding common mistakes. This concept, known as range-bound liquidity, helps you identify where other traders might be "puking" their positions, creating opportunities for those who wait patiently.

🧐 The Core Idea: What Is It?

Imagine a price range, defined by a high and a low. Most traders see these clear levels and place their orders right there. We, however, want to do the opposite: we look for liquidity just outside the range's boundaries to "fade" or go against the immediate herd.

Why? Because these immediate, obvious levels are what we call "retail liquidity"—the easy-to-see targets that many traders chase. The real opportunity lies in the "latent" or hidden liquidity beyond these levels, which a patient trader can use to their advantage.

🎯 The Rule of Thumb: Patience Pays

A crucial principle to remember: before price makes a significant move in one direction, it will almost always sweep the liquidity above or below its current range pivots (the range high/low). This is a deliberate move to "trap" traders who enter too early.

Think of it this way: everyone sees the same thing. Everyone who rushes in gets stopped out when the price briefly moves against their intended direction. Your job is to wait for this predictable "liquidity sweep" and then enter the trade.

📉 Traps to Avoid: The Double Tap

History shows that if price "taps" or "raids" a pivot level more than twice, it's a signal that the initial move is likely to fail. This happens because the majority of traders who bet on that initial direction are getting stopped out, or "puking" their positions, into latent levels like Order Blocks, Demand, or Supply zones.

You have two choices here:

Passive Liquidity: Place a limit order into the "fade" (the move against the initial direction) and wait.

Active Liquidity: Wait for the price to reclaim the range pivot after the sweep. This is a much safer, more confident entry. By waiting for confirmation, you are entering with the new momentum, not against it.

👶 The "Developing Range" Problem

The third type of range I mentioned is a "developing range" that forms right next to a higher time frame (HTF) range. This is a common trap! When a new range "smooches" or overlaps with an existing one, it often creates a confusing, choppy environment where it's hard to establish a clear bias.

This is where most traders, including myself, get faked out and lose money. The best move here is to do nothing. Wait for a confirmed area of interest (POI) to form before taking any action.

💡 Putting It All Together: A Real Example

Consider the example I shared:
Price first swept the low because there was a lot of obvious, "visible" liquidity there.
Even if you missed that initial low, there was still an opportunity to enter on the continuation higher.

This is because the overall trend-based liquidity was still in place. The main trend was still up, and the sweep of the low was just a temporary hunt for liquidity before continuing the main move.

The lesson? Don't get fixated on catching the absolute low or high. By understanding the overall liquidity flow and the trend, you can still make substantial profit even if you miss the perfect entry. The key is to have a clear bias and wait for confirmation.Image
2. Trend Based Liquidity:

After understanding how price moves in a range, the next crucial step is to recognize how it behaves within a trend. This concept, known as trend-based liquidity, helps you find the perfect entry points when a market is moving consistently in one direction.

🧐 The Core Idea: Where's the Liquidity?

Even within a strong trend, price doesn't move in a straight line. It has periods of compression (sideways movement or shallow pullbacks) before its final expansion (a strong move in the direction of the trend). The key is to find the point where this compression is happening, as that's where the active liquidity is building up.

The easiest way to spot this is by looking for "vertical accumulation or distribution," which are periods where price consolidates before a big move.

📉 Example Breakdown: When and How to Enter

Let's break down the examples from my chart:

Scenario A ($A): In a downtrend, price finally "pukes" or makes a sharp move down, hitting a key level. This is often an order block from a much higher timeframe. Many traders who were shorting this trend from earlier levels get stopped out here, creating a flush of liquidity.

Scenario B ($B): In an uptrend, price has a pullback, but it doesn't retest the expected order block. This is a common trap! Many traders waiting for that perfect entry miss the move. What do you do? You wait for confluence.

Scenario C ($C): The wait continues. Price makes another move up, but you still don't get your ideal entry. This is when you combine your analysis with other factors. For example, if Range 3 (from our previous example) was a key level, you might wait for a retest of its high. When it sells off from there into a freshly created demand zone, you get a new opportunity.

💡 Putting It All Together: The Big Picture

The goal isn't to catch the absolute lowest price. It's to find a high-probability entry based on confluence. You had multiple chances to enter this trade, and even if you missed the first or second, you could still get in on the third.

The key takeaway is to stop focusing on exact percentage movements. The real win is achieving a good Risk-to-Reward Ratio (R). Whether you entered at the first, second, or third opportunity, the net result was the same: a profitable trade with a good R. Patience is your most valuable tool.Image
3. Internal & External Liquidity:

Before I get into the details, I want to clarify a couple of terms I use: Internal and External liquidity. Internal liquidity is everything that happens within a price range or trend, from the highest point to the lowest. This includes all the small price movements and minor zones I see on a lower timeframe. External liquidity, on the other hand, is what I look for outside the current range, like a major demand or supply zone. I like to think of it as the ultimate goal the market is trying to reach.

🧐 My Rule of Thumb: Trading the Extremes

In my experience, the market always travels from one extreme of External Liquidity to another. I find this rule incredibly useful for my trading. On my chart, I've marked an order block in green and a supply zone in red. In this case, price has already moved down and taken out the order block. My expectation is that over the next few days, it will continue to move up to take out the supply zone.
Because of this, I'll continue to trade with the overall trend. I'll stay long, but I'll start to be more cautious as price gets closer to that external supply.

💡 The Takeaway: How I Swing Trade

For me, this is the core of swing trading. I focus less on the noisy, internal liquidity and more on the major, external levels. I could try to scalp the hundreds of small moves inside a range, but I've found that it's safer and more profitable to focus on the bigger picture. Liquidity isn't just about where stop losses are; it's where the big money is being targeted. I follow that money and align my trades with the overall direction it's headed.Image
4. Sell Side Liquidity:

Most of you might already know this, but I'll give a quick overview. Sell Side Liquidity (SSL) is created at a low on the chart, usually with a prominent wick that extends below neighboring candles. This is where buy-stop and resting buy limit orders are waiting. I've found that this passive liquidity is then sought by larger players who want to enter the market. When they do, they "front-run" everyone else, and that passive liquidity becomes active liquidity as their orders are filled and price moves away.

🧐 My Example: The Traps I Saw

I looked closely at this recent price action. I saw that SSL was created three times to push the price up before everyone was finally trapped in that major dump. What I find most interesting is that this dump went on to sweep the very order block I've been discussing in my other threads. This really proves the point that if I can't identify the liquidity, I'm going to become the liquidity.

💡 The Takeaway: How I'll Trade It

The most recent SSL is the one I've marked with a red line. Now that I understand the concepts I've shared, I know when this level will likely be swept and how low the price might go. This gives me a clear plan: I can either place a limit order at a specific level below it or wait for the price to sweep that liquidity and then trade the reclaim. This is how I turn a potentially dangerous zone into a profitable opportunity.Image
5. Buy Side Liquidity:

Just the opposite of SSL. Image
6. Active, Passive and Latent Liquidity:

Before I wrap up this thread, let's talk about three final words I use to describe liquidity. I've used these concepts throughout my posts, and understanding them will help you see the market in a new way.

These words are all related to the order book, which is simply where orders are placed. By understanding them, I've found I don't need to read complex order flow to understand what the market is doing.

🟢 Active Liquidity

Active liquidity is inserted into the market suddenly, seemingly out of nowhere. This is what causes those rapid pumps and dumps we see on the charts. If you link this to my previous posts, you'll see that this is how SSL and BSL (Sell and Buy Side Liquidity) originate. It's immediate and aggressive.

⚪ Passive Liquidity

Passive liquidity is publicly available data, like the limit orders you see on a trading platform. I've found that entities use this to strategically push and pull the price between their spot and futures orders, which creates what we call discountsand premiums in the market. Passive liquidity is usually done with the intention to "fade" or go against a strong move.

⚫ Latent Liquidity

Latent liquidity is the hidden stuff. It's liquidity that isn't publicly visible but can become active at any moment. Think of it as a pool of orders that were once visible but have been pulled, waiting to be reactivated.

💡 My Example: Bringing It All Together

On my chart, I've used the same order block as our main example. I know from looking back that right after the first pump on February 28th, passive liquidity was created as traders placed limit orders to sell. Then, on March 5th, active liquidity pushed the price down, but because passive liquidity is designed to fade, it led to a further expansion upward after that.

After all that price action, the majority of traders likely pulled their orders from that passive level, thinking price would never return. But a few stubborn ones like me left our orders there. This is when that passive liquidity turned into latent liquidity.

Eventually, price returned to this hidden level, and those few of us who were waiting there were rewarded with a bounce. This shows how understanding these concepts helps me anticipate the market's next moves.Image
If you found these concepts helpful, I encourage you to bookmark this thread and practice them on your own charts.

I've also created a Discord community to share more valuable knowledge and connect with other traders. Feel free to join and ask any questions you have.

discord.gg/3UdEKFFh3h

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More from @CryptoBheem

Sep 14, 2024
setup that makes me $13,000 (1R) per day, a thread with parameters🧵 Image
I’m going to talk to in configuration of a long setup (vice versa applies to shorting)

Step 1 is to identify an uptrend that has started to cool down by ranging sideways. Depending on the time frame it can vary (this can be days to hours) Image
Step 2 is to zoom in to spot an orderblock below range lows or equal lows (both are same)

You’d place a limit order at the starting body of the block and stop loss below the ending wick of the block.

If the desired area is a cluster of orderblocks, I’d recommend to use a manual candle closure stop loss.Image
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Scaling from making $100 a day to over $200,000 sounds pretty unrealistic, but it's possible !!

In this thread, I'll share my trading plan designed to help you establish a strong baseline for compounding capital over the next 3 years like I did🧵 Image
[I stopped taking partial profits]

While many traders opt for multiple TP targets to secure partial profits along the way, this strategy can often dilute the overall risk-reward ratio (RR) of the trade. In contrast, having a single TP target can lead to more consistent and substantial profits.

Understanding Risk-Reward Ratio (RR)
The risk-reward ratio is a measure of the expected return of an investment relative to the amount of risk taken. It is calculated by dividing the potential profit by the potential loss. For example, a 2:1 RR means that for every dollar risked, the potential reward is two dollars.

Let's consider a BTC/USDT trade with the following parameters:

Entry Price: $30,000
SL: $29,500 (risk of $500 per BTC)
Single TP Target: $31,000 (reward of $1,000 per BTC)
With a single TP target, the RR is straightforward:
RR = Potential Reward / Potential Loss = $1,000 / $500 = 2:1

Now, let's examine a scenario with multiple TP targets:

First TP at $30,500 (50% of position)
Second TP at $31,000 (50% of position)

If you achieve the first TP:
Profit from 50% position: $250 ($30,500 - $30,000) x 50% = $250

If the price continues to the second TP:
Profit from the remaining 50% position: $500 ($31,000 - $30,000) x 50% = $500

Total Profit: $250 (first TP) + $500 (second TP)= $750

In this case, the effective RR changes:
Effective RR = Total Profit / Total Loss = $750 / $500 = 1.5:1

While securing partial profits can provide some immediate gains, it reduces the overall RR from 2:1 to 1.5:1. This reduction means that you need a higher win rate to achieve the same profitability. Furthermore, if the trade stops out at the SL, the full loss is incurred, which can disproportionately impact the overall performance. By sticking to a single TP target, you maintain a clear and consistent RR, making it easier to evaluate the performance of your trades. Capturing the full potential of a trade without diluting the reward ensures that successful trades significantly outweigh the losses.Image
[I started adding orderblocks and Supply & Demand confluence to basic Support & Resistance]

The Concept of Confluence

Confluence occurs when multiple technical factors point to the same price level, increasing the probability of a successful trade. When key levels align with order blocks or supply and demand zones, it provides a stronger signal that the price is likely to react at these levels.

The Importance of Confluence

Trades taken at confluence points are more likely to succeed because they are based on multiple confirming factors. The alignment of key levels with order blocks or supply/demand zones often results in more pronounced price movements. Confluence allows for better-defined entry and exit points, aiding in effective risk management and enhancing the overall risk-reward ratio.

The image shows Monthly Open paired with an orderblock providing confluence in taking a continuation long on SUI/USDT.Image
Read 12 tweets
May 18, 2024
I turned $1000 into $3,678,519 in 3 years without cracking my mind over what everybody else already knows!

If you can't identify the Liquidity, you will be the Exit Liquidity🩸

Here's how you can spot 6 different forms of Liquidity to manifest a high win rate from today🧵Image
1. Range Bound Liquidity:

As the name suggests, you are looking for liquidity inside the range but the core of which lies outside the actual range; to fade in order to not turn into what they call retail liquidity. For this example, I am using latest BTC Price Action (PA) between March until present day. On the chart, 1 represents a Lower Time Frame (LTF) range, 2 for Higher Time Range (HTF) and 3 for a developing range.

Rule of thumb to note among all 3; Price will at least once, seek latent liquidity above/below its pivots (which is the range high/low) before moving in the initial direction you intended to aim for. This is because, just like you- plenty of same brains across the world were aiming for the same direction except those that sought patience, sometimes even weeks, waiting for them to puke LTF decisions into HTF levels.

Now coming to some facts proven by history and of course own memory (since this thread is how I use liquidity amongst the general concept used by all). If price taps/raids more than twice above/below its pivot, its more likely to fail into those that wait. Right, this is because, at all times, price will fade into latent levels (Order blocks, demands or supply) and since a good number of people who are against technical analysis are being born daily and alive, they will puke into what is clearly on the chart; basic human psychology hehe. You are presented with 2 options; limit order into the fade and become passive liquidity yourself or wait for the reclaim of a range pivot to be a part of active liquidity. If you haven’t noticed yet, 3 is where most including myself could be wrong to form a bias too early, and that is because if you look further, range 3 is smooching the same area occupied by range 2. Now they make babies together which is your negative PNL, just kidding. Now is when you just wait and see where and when, a good area of interest (POI) is created to establish a confirm bias to act upon. One more thing, between 1 and 2, price swept the low first because a ton of visible liquidity was at the lower levels. At 3, there is an order block below too, most including myself waited for it, but never got it so we waited to get into the continuation higher. Despite missing the low, money was still made (substantially) not because the liquidity raid did not happen, instead- trend based liquidity was kept in mind, which is going to be our next point.Image
2. Trend Based Liquidity:

Right where I left off, order block below 3? No retest? Wait for retest? Or get in higher? But the question is, when? There will always be a trend, if not then it becomes a range. Just like ranges, there is Active Liquidity inside trends. What this means is, you are most likely to not know when it will be inserted into the market, so again, you wait. In this image, I have zoomed into the part where ranges 2 and 3 were from above, except 2 is erased for a cleaner view.

Liquidity inside trends is where price has its final compression before the expansion. The quickest way to find that is by looking for vertical accumulation or distribution where a trend is initially moving towards. In the image, I have expressed these by the $ symbols. As you can see $-A is trending downwards and at one point it finally pukes into a key level. Go back above to the first image and see where it goes. Right, into the order block coming from all the way back. Do you remember the people that were targeting 52k from here? Yeah, rookie pookies. So now onto $-B which is inside an uptrend and back to the headline of this category. Price pukes but it does not take the order block this time, everyone who waited, missed it, what now? As you go further towards $-C, you can see that the wait still isn’t over and the sideliners may have one more chance at filling their bids (including me) but woosh there it goes again. Here is when, confluences come in to play. Remember range 3, it goes for a retest of its high and sells off down again but this time into a freshly created demand zone. Missed that too? No worries, it breaks out above its higher pivot (range high) following another uptrend where you could market in and become active liquidity.

Between all of this action, you got 3 chances to secure a long and oh if you still have your mind glued to percentage movements, it’s time to change that. I could’ve gotten in at first attempt, second or third (which I did) and net result would’ve been the same; +2-3R in profit unless I was being edged to a tight pus… I mean stop loss.Image
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Jan 22, 2024
$1000 to $1,000,000 in 3 years then almost $2,500,000 since October 2023🤨

How come I can compound trades while keeping losses minimum?

In this thread, I'll explain 12 Entry Models I use on a daily basis to rapidly increase my net-worth as a spot markets day trader | No Leverage, No Shitcoins !! 🧵Image
Before going through each entry model, I recommend to watch this video about ranges, order-blocks and supply/demand explained in under 35 minutes!


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Model 1 | Sell Side Liquidity

Often around the mid range, price will leave a candle with a large buy back wick, this is called the SSL.

Wait for price to sweep & reclaim. Best confirmation is to wait for 4H candle to close above.

Target the first high left above or the opposite of SSL, which is the Buy Side Liquidity (BSL).

Invalidation is simply placing a hard stop below the recent low that was created after the sweep.Image
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