Liquidity Run Or Liquidity Sweep ( Purge Or Bos )
Summary
TLDRThis 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
- π 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.
- π 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.
- π 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.
- π In a bearish trend, expect a stop hunt at swing highs, which is a price reversal that traps buyers and continues the downtrend.
- π Follow the trend: Always trade in the direction of the established trend, as it increases the likelihood of a continuation rather than a reversal.
- π Use supply and demand cycles: Recognize the market structure cycle of supply and demand to anticipate price reactions and potential reversal points.
- π 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.
- π 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.
- π« 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.
- π Anticipate retests: After a significant price movement, anticipate a retest of the broken level as the market may return to absorb internal liquidity.
- π 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
π 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.
π€ 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.
π 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.
π 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.
Mindmap
Keywords
π‘Swing High
π‘Swing Low
π‘Continuation
π‘Reversal
π‘Liquidity
π‘Stop Hunt
π‘Trend
π‘Supply and Demand
π‘FIB
π‘Extreme Levels
π‘Breakout
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
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