Liquidity Run Or Liquidity Sweep ( Purge Or Bos )

Summary

This educational video script teaches traders how to identify whether a market price will continue in the same direction or reverse, forming a 'stop hunt' or 'purge'. The key to this is understanding the prevailing market trend. In an uptrend, swing lows are likely to be 'stop hunts', while in a downtrend, swing highs are targeted. The script uses supply and demand cycles to illustrate these concepts, emphasizing the importance of trend-following and anticipating price reactions to avoid getting trapped by market movements.

Takeaways

• 📈 Identify the market trend: Recognize whether the trend is bullish or bearish as it dictates the nature of potential price movements after crossing key swing levels.
• 🔄 Understand liquidity traps: Many traders get trapped when the price crosses a swing high or low, not knowing if it's a continuation or a reversal.
• 🏁 Look for stop hunts: In a bullish trend, anticipate a stop hunt at swing lows, which is a price reversal that traps sellers and continues the uptrend.
• 📉 In a bearish trend, expect a stop hunt at swing highs, which is a price reversal that traps buyers and continues the downtrend.
• 🔑 Follow the trend: Always trade in the direction of the established trend, as it increases the likelihood of a continuation rather than a reversal.
• 📊 Use supply and demand cycles: Recognize the market structure cycle of supply and demand to anticipate price reactions and potential reversal points.
• 📍 Mark key levels: Clearly mark swing highs and lows, as well as extreme levels of supply and demand, to identify potential entry and exit points.
• 🔍 Observe price reactions: Watch for price reactions at key levels to confirm the strength of the trend and the likelihood of a continuation or reversal.
• 🚫 Avoid premature trades: Do not trade on the assumption of a breakout without confirming the market's intention to continue or reverse at key levels.
• 🔄 Anticipate retests: After a significant price movement, anticipate a retest of the broken level as the market may return to absorb internal liquidity.
• 📝 Plan trades carefully: Use lower time frames to confirm entry points and set stop losses and take profit levels for more precise trading strategies.

Q & A

What is the main focus of this trading lesson?

The main focus of this trading lesson is to teach traders how to identify whether a price movement will continue in the same direction (continuation) or reverse and form a trap (stop hunt).

Why is it important for traders to understand the difference between a continuation and a stop hunt?

It is important because many traders get trapped in the market when they fail to recognize the difference, leading to potential losses if they misinterpret a continuation as a reversal or vice versa.

What is the primary factor to consider when determining if a price movement will be a continuation or a stop hunt?

The primary factor to consider is the prevailing trend in the market. If it is an uptrend, the swing high is likely a liquidity run (continuation), and if it is a downtrend, the swing low is likely a stop hunt (reversal).

What is a liquidity run and how does it relate to the trend?

A liquidity run is a situation where the price continues in the direction of the trend after crossing a swing high in an uptrend or a swing low in a downtrend, indicating a continuation of the trend.

What is a stop hunt and how does it differ from a liquidity run?

A stop hunt is when the price reverses after crossing a swing level, trapping traders who expected a continuation. It differs from a liquidity run in that it results in a reversal rather than a continuation of the trend.

What is the significance of the supply and demand market structure cycle in this context?

The supply and demand market structure cycle is significant because it helps traders identify key levels where price reactions occur, which can indicate potential continuations or reversals.

How does the concept of 'extreme levels' relate to trading in a bearish trend?

In a bearish trend, extreme levels represent the premium and discount zones. Traders look for stop hunts at the premium level, expecting the price to reverse and continue the bearish trend.

What is the recommended approach when the price is coming from the discount level in a bearish trend?

When the price is coming from the discount level in a bearish trend, traders should look for runs or continuations, expecting the price to break structure and move higher before anticipating a stop hunt as it approaches the premium level.

How can traders identify potential entry points for trades based on the concepts discussed in the lesson?

Traders can identify potential entry points by looking for breaks in the range or previous resistance levels, and entering trades when the price moves below these levels with a stop loss set above the high of the broken range or resistance.

What is the importance of following the trend when trading?

Following the trend is crucial because it helps traders align their trades with the market's direction, increasing the likelihood of successful trades and reducing the risk of being trapped in a stop hunt.

How can traders use the concept of 'stop hunt' in a bullish market?

In a bullish market, traders can use the concept of 'stop hunt' by targeting swing lows, expecting the price to come down, take out the level, and continue higher, even if there is a potential change of character to a bearish cycle.

Outlines

00:00

📈 Understanding Continuation and Stop Hunt in Trading

This paragraph introduces the concept of identifying whether a market will continue in a given direction or reverse, forming a 'stop hunt' or 'purge'. It emphasizes the importance of recognizing liquidity traps that traders often fall into. The key to discerning a 'liquidity sweep' or 'liquidity run' is understanding the prevailing market trend, which can be bullish or bearish. In an uptrend, a swing high indicates a run, whereas a swing low in a bull trend suggests a stop hunt. The video encourages viewers to like and comment for further clarification and uses an example to illustrate the supply and demand cycle in a market structure, highlighting the importance of anticipating price reactions to these levels.

05:03

🤔 Trader Misconceptions and Stop Hunt Strategies

The second paragraph discusses common trader mistakes in interpreting market movements, particularly mistaking a stop hunt for a breakout or a run. It clarifies that in a bullish market, traders should anticipate a stop hunt at swing lows to trap sellers and continue the upward trend. The video promises to clarify these concepts further and provides an example of a stop hunt in a bullish trend, explaining the importance of following the overall market trend and anticipating price behavior based on the trend's character. It also touches on how to handle potential changes in market character and the importance of targeting swing lows in a bullish trend as a stop hunt for a win-win scenario.

10:06

📉 Bearish Market Analysis and Stop Hunt Entry Points

This paragraph focuses on the bearish market scenario, explaining how to target swing highs for a stop hunt, which is counter to the trend. It details the process of anticipating a stop hunt when price approaches the premium level and provides an example of how to identify and trade these situations. The video also discusses the importance of using lower time frames to anticipate retracements to extreme levels and how to set entry points and stop losses for trades based on previous resistance levels and range breaks, offering a strategy for continuation trades within the market structure.

15:06

🔄 Market Structure Dynamics and Trade Execution

The final paragraph wraps up the lesson by summarizing the importance of following the market trend and understanding the dynamics of market structure. It reiterates the strategy of looking for runs when coming from a discount level and anticipating stop hunts when approaching a premium level. The video provides a clear example of how to mark levels and anticipate continuation or reversal in price movement. It also discusses different entry points for trades, including using range breaks and previous resistance levels, and how to set stop losses and take profit points. The video concludes with an invitation for viewers to like, share, subscribe, and provide feedback for further lessons on advanced topics.

Keywords

💡Swing High

In the context of the video, 'Swing High' refers to a point on a price chart where the price reaches a local maximum before reversing direction. It is significant for traders as it indicates a potential area of resistance. The script mentions that in an uptrend, a swing high would be a liquidity run, suggesting that the price is expected to continue higher after reaching a swing high.

💡Swing Low

A 'Swing Low' is the opposite of a swing high, occurring when the price reaches a local minimum before reversing upward. It is a point of potential support in the market. The video script explains that in a bullish trend, targeting swing lows could lead to a stop hunt, where the price is expected to reverse and trap sellers, continuing the upward trend.

💡Continuation

'Continuation' in trading terms means the price is expected to move in the same direction as the prevailing trend. The video emphasizes the importance of identifying whether a market move will be a continuation or a reversal. For example, if the trend is bullish, a continuation would imply that the price will continue to rise after crossing a swing high or low.

💡Reversal

A 'Reversal' is a change in the direction of the price trend. The script discusses the possibility of a price reversal after crossing a swing high or low, which could lead to a trap for traders who are expecting a continuation instead. This is particularly important in the context of a stop hunt, where the price is expected to reverse and trap traders who are positioned contrary to the new trend.

💡Liquidity

In financial markets, 'Liquidity' refers to the ease with which assets can be bought or sold without affecting their price. The script mentions building liquidity as a precursor to a potential price reversal, indicating that when price crosses a level of accumulated liquidity, it can lead to significant price movement, either a continuation or a reversal.

💡Stop Hunt

A 'Stop Hunt' is a trading strategy where a price is pushed to a level where many stop-loss orders are placed, causing a rapid price movement that triggers these orders. The video script describes a stop hunt as a situation where the price is expected to reverse direction, trapping traders who have placed their stop-loss orders at a specific level.

💡Trend

The 'Trend' in trading is the general direction in which prices are moving. The script emphasizes the importance of identifying the prevailing trend (bullish or bearish) to predict whether a price movement after crossing a swing high or low will be a continuation or a reversal. Following the trend is crucial for anticipating stop hunts and liquidity runs.

💡Supply and Demand

'Supply and Demand' is a fundamental concept in economics and trading that refers to the relationship between the quantity of a commodity that producers are willing to supply and the quantity that consumers are willing to purchase at various price levels. The video script uses the concept to explain market cycles and the potential for price reactions at certain levels, which are identified as swing highs and lows.

💡FIB

In the script, 'FIB' likely refers to Fibonacci retracement levels, a popular technical analysis tool used to identify potential support and resistance levels. The video mentions using FIB to analyze price reactions, suggesting that traders can use these levels to anticipate future price movements, particularly in the context of a stop hunt or a liquidity run.

💡Extreme Levels

'Extreme Levels' in the context of the video are the highest (premium) and lowest (discount) price points within a trading range. The script explains that traders should look for continuation when prices are coming from the discount level and anticipate a stop hunt when approaching the premium level, as these levels are associated with significant buying or selling pressure.

💡Breakout

A 'Breakout' occurs when the price moves past a significant level of resistance or support, indicating a potential change in trend direction. The video script warns against mistaking a stop hunt for a breakout, as traders might incorrectly assume the price will continue in the direction of the breakout rather than reversing, which could lead to losses.

Highlights

Lesson focuses on identifying if a price movement is a continuation or a reversal, which is crucial for traders to avoid getting trapped.

Traders often get stuck when price crosses a swing and it's unclear whether it will continue or reverse.

Understanding the trend is key to predicting if it will be a liquidity sweep or run.

In an uptrend, a swing high indicates a liquidity run, not a sweep, meaning price will continue higher.

Engage with the video by liking and commenting to support the content.

Example provided to illustrate the concept of supply and demand cycle in market structure.

In a bullish market, any swing low targeted is likely a stop hunt, not a continuation.

Market can change, but often prices will revert to the range before a significant trend change.

Stop hunt is a strategy used when price is bullish to trap sellers and continue the upward trend.

Traders often mistake a potential stop hunt for a breakout, leading to incorrect trading decisions.

Following the trend is crucial for successful trading, especially in identifying stop hunts and runs.

In a bearish trend, targeting swing highs can indicate a stop hunt to continue the downward trend.

Even in a bearish trend, prices may revert to the range to use internal liquidity before starting a bullish cycle.

Understanding extreme levels is vital for anticipating runs or stop hunts in both bullish and bearish trends.

Continuation trades can be executed when price reaches a certain level, indicating a potential trend continuation.

Entry and exit strategies are discussed for trading stop hunts effectively.

The video offers to create an advanced lesson if it receives enough engagement, indicating the value of community feedback.

Transcripts

so in this lesson you're going to learn

if it's going to be a continuation or a

stop

hunt as you can see here you have your

swing once price crosses the swing we're

going to learn if price is going to

continue within that direction and form

a continuation or reverse and form a

purge which is your

trap and why this lesson is extremely

important is a lot of Traders get

trapped in this situation as you can see

here a liquidity is being built and once

price crosses that liquidity a lot of

Traders get stuck they don't know if

it's going to be a continuation which is

a run and price is going to continue

within that direction or price is going

to reverse and trap them forming a

purge the most important thing when it

comes to figuring out if it's going to

be a liquidity sweep or a liquidity run

is your Trend you want to make sure you

can see the trend if the trend is

bullish or if the trend is

bearish so a basic rule of thumb is if

it's a uptrend your swing high would be

a liquidity run not a sweep price will

continue continue

higher now if it's a bull Trend and your

swing is your swing low that you're

targeting you are looking at a stop

hunon which is your liquidity

sweep before you proceed please make

sure you like the video and leave a

comment this video is completely

unmonetized so let's take a look at this

example what do you see here you see

that price is making higher

highs for a clear look as you can see

this was our swing High swing low swing

high and price reacted from our discount

so this is the beginning of a supply and

demand cycle supply and demand Market

structure cycle so now let's mark our

range let's mark our

swings and let's look for a stop hunt

why are we looking for a stop hunt

because price is bullish if price is

bullish if price is bullish any swing

low we're targeting would be a stop hunt

unless the market will completely change

and even if the market does completely

change a lot of times price will pop

back inside of the range and I'll

explain this in the next

segment so what do we have here we have

a reaction from our Demand right and if

you pull out your FIB you can see price

is reacting from our lower demand so

what are we waiting for we're waiting

for a visit back because price is more

than likely going to visit this area

back before expanding to complete the

supply and demand structure just like

the previous reaction if you can see

right here price reacted from a extreme

discount level to continue higher so

what are we going to do

here we're going to mark this

level and if price does get below this

swing what are we anticipating if price

gets below this swing we're anticipating

a stop hunt price to trap Sellers and

continue with the macro

cycle and what happened here you had

your stop

hunt why because price is bullish as you

can see price is

bullish so we can continue this exact

Trend we can

continue swing High swing low and price

is moving in a supply and demand Market

structure until we notice a change in

profile so now we have our stop hun

which high are we targeting we are

targeting

this major High Let's

see we had our return to

origin and price broke

structure so what are we waiting for now

when price comes back inside of the

range let's see if price gets

deeper so now what are we waiting for

let's clear this up where is our swing

low this is our swing low and this is

our swing high so this is our current

range so what we're waiting for we're

either waiting for a swing to form

inside of here or we're waiting for a

major stop hunt which would be price

taking out this level price coming down

here taking out this level and

continuing higher and again why are we

doing this like I explained previously

because we're going along with the

structure we're going along with the

market

trend

so now what would you do here a lot of

Traders try and sell into this situation

they think this is a breakout they think

this is a breakout or a run they think

price will continue lower but we know in

this case since the market is bullish

price will more than likely stop hunt

trap these Traders right here try trap

the sellers and continue with the

initial structure that was formed right

here and don't worry if you're still if

you're still a little bit lost we'll

make it clear as we go in this

lesson as you can see what happened

here prably stop

hunted price purged all the

sellers and will more than likely

continue

higher

so to wrap things up the main thing here

is you always want to follow the trend

so let's say price is

bullish if you're targeting your swing

lows in a bullish Trend you can

expect price to come down here take this

level out and continue higher and even

if there is a change of character so

let's say this is a bullish cycle and

you're anticipating next a bearish cycle

based of a higher time frame and

efficiency right let's say that's the

case even if that's the case price will

still come down here and still come back

inside of the range to grab more

internal liquidity to then completely

change character so targeting a swing

low in a bullish Trend as a stop Hunt is

a

winwin

and let's try it out in a bearish market

just to make it clear for you

guys so let's say this is a bearish

trend in the bearish

trend you're targeting swing highs for a

stop hun why are you targeting swing

highs for a stop hun because that's

counter Trend and if price does get to

this level price will stop hun and come

back and continue

the bearish trend and again even if that

doesn't happen we can always anticipate

something like this always anticipate

price to come out still having to come

back inside of the range to use internal

liquidity to start a bullish cycle in

case of a change of character looking at

lower time frames let's say you are in a

bearish

trend

let's say you're in a bearish trend so

on the lower time frames what you're

looking for

is if you mark up your extremes and let

me show you the settings real

quick these are the

settings and I explained extreme levels

multiple times before but this is your

premium and this is your discount this

is where selling the item would be cheap

and this is where buying the item would

be cheap so knowing that

any swing here coming from your discount

you're looking for a run but once price

starts to get closer to your discounted

level to your premium level excuse me

you're looking for a stop Lun so let's

say a swing right here and this swing

gets taken you're not expecting a

continuation that is not what you're

expecting you're are now expecting a

stop hunt and for price to continue

lower

so let's take a look at this example as

you can see the trend is bearish let's

go into 12 hour for a better View and

what can we see

here we can see that we had a swing High

let's make it

red and we had a swing low price broke

structure so now we can go in a lower

time frame and

anticipate a retra bement back to our

extreme

level so again like I said

previously when you're coming from the

discounted level which is your bottom

corner you are looking

for runs you're looking for continuation

you're looking for price to break

structure and continue higher break

structure and continue higher but once

price gets closer to this level now

you're starting to anticipate a stop

hunt and for price to continue with the

trend why is it the trend because the

overall trend is bearish as you can see

and you had a break of structure here on

the current price

range so let's just Mark these

levels

so again remember this as long as price

is coming from your discount you're

looking for runs you're looking for a

continuation when price reaches

your when price reaches your premium

level your top quarter you're looking

for a stop

hunt you can see you had a micro swing

right here so you're still anticipating

price to go up now it could come back

inside of the range to grab more

liquidity to continue up but the

direction is up at least until

here and one way to trade these runs

which I'll make a separate lesson

on is to get in a continuation trade so

once price gets to this level you are in

a continuation

trade that'll be one way to trade in and

we'll have a whole lesson in how to

figure how to figure everything out as

far as your risk the reward and

everything like

that so now price is coming back inside

of the

range now you have your swing right here

so you can anticipate price to still

continue

higher

and now what do you have here you have a

swing that's getting really close to

your discounted level to your premium

level so what are you waiting for once

price gets to this level you're waiting

for

a stop hunt lock in and for price to

continue

lower

price is still not breaking this level

let's pay

attention and you had your stop

hun this was your stop

hunt now all the buyers are trapped and

how would you enter this trade of course

I explained this multiple times as far

as your lower time frame confirmation

you can go on a lower time frame and you

could look for a

range so let's clear this make it a

little bit more clear so what you're

looking for is you're looking for a

range to form in a Range to be broken so

as you can see here you had a swing low

swing high and price came back down so

now you're targeting this level but then

price made another range and you could

Target this level and at the end price

made this

range

so your entry would be right below your

range is right here your entry would be

right

here you would enter when price gets

below this level and your stop loss

would be right at that high or a little

bit above like I explained in previous

lessons another

way another way to trade

this but you will have a wider stop loss

you could look at previous resistance

levels

so as you can see here price found

rejection right

here let's make it black and I explain

this in the previous lesson the one I

did last week as far as rejection level

goes as you can see here this was a

rejection level price was rejected right

here price was rejected right here and

rejected right here so we know once

price gets below this

level once price gets below this level

and completely breaks this level you can

enter the trade your stop- loss right

here and where would your TP be your TP

will

be back down to the extreme this when

you want to stretch your

extreme

hope you guys enjoyed this video make

sure you like share and subscribe and if

you guys like the video make sure you

like the button and if we reach 500

likes I will make an advanced lesson

about this

topic