Boot Camp Day 10: Liquidity Pt. 2

Summary

Highlights

• TJR continues with advanced insights into market liquidity. 📊
• Explores the importance of identifying liquidity zones for strategic trading. 🏹
• Discusses how retail traders often fall into liquidity traps unknowingly. 🎯
• Illustrates examples of liquidity sweeps on various time frames. 📅
• Assigns practical homework to practice spotting liquidity on chart patterns. 🔍

Key Takeaways

• Liquidity is where market action occurs, crucial for executing big trades. 🚀
• Understanding liquidity helps traders predict market moves and avoid common pitfalls. 🔍
• Spotting liquidity in market charts is essential and ties to larger trading strategies. 📈
• Liquidity sweeps happen across all time frames, and recognizing them is vital. ⏰
• Homework is crucial: exploring charts will reinforce learning about liquidity sweeps. 📚

Overview

Chapters

• 00:00 - 01:00: Introduction to Liquidity in Trading The chapter begins with a reference to a previous discussion on liquidity in trading. It emphasizes the continuation of the topic by focusing on spotting liquidity within the market and understanding its positioning.
• 01:00 - 02:00: Spotting Liquidity in the Market This chapter aims to break down the concept of spotting liquidity in the market, ensuring a step-by-step approach for better understanding. The focus is initially on processing and grasping the fundamental ideas before moving on to trade execution. The main topic is the identification of market liquidity, setting the stage for strategic trade discussions in subsequent sessions.
• 02:00 - 04:00: The Role of Liquidity in Market Movements In the chapter titled 'The Role of Liquidity in Market Movements,' the speaker introduces the importance of understanding and identifying liquidity in markets. Liquidity is crucial because it is where orders get filled and where banks can influence market movements. The implication is that understanding liquidity can assist traders in making informed decisions. Although the speaker mentions plans to discuss strategies further in two days, this chapter lays the foundational understanding of why liquidity matters in trading.
• 04:00 - 06:00: Retail Traders and Trend Patterns The chapter titled 'Retail Traders and Trend Patterns' discusses how orders are filled in the market. It reveals that for institutional investors or banks to push the market in their desired direction, there must be counter-orders from other traders. To fulfill millions of orders, there must be an equal amount going in the opposite direction. The chapter emphasizes the concept of liquidity and explores where liquidity lies, explaining the mechanics of market exchanges whereby parties must trade in opposite directions for large orders to be executed.
• 06:00 - 09:00: Understanding Stop Loss Orders and Buy Stops This chapter introduces the concept of stop loss orders and buy stops, particularly in relation to trends in trading. It emphasizes the behavior of trends through higher highs, higher lows, lower highs, and lower lows, pointing out the patterns traders observe. The narrative suggests a focus on how retail traders perceive these patterns and utilize such orders in their trading strategies. The importance of understanding the 'who', 'where', 'when', and 'why' behind these orders is highlighted, suggesting a deep dive into the mechanics and decision-making processes behind trading moves.
• 09:00 - 12:00: Liquidity and Market Direction The chapter discusses the concept of market trends, focusing on the pattern of 'higher highs' and 'higher lows.' This indicates an upward trend where prices consistently reach higher than the previous peaks and low points. When a new higher high is achieved, it confirms the continuity of the trend. The chapter also highlights how retail traders react to these patterns by setting buy stops, which are pending orders designed to capitalize on the expectation of further upward movement.
• 12:00 - 15:00: Practical Examples: Spotting Liquidity In this chapter, the focus is on spotting liquidity through practical examples. It discusses how price points above the high can trigger order executions as traders try to capitalize on the trend's continuation. Additionally, it highlights that stop-loss orders are often placed above these highs. This is because while some traders aim to buy with the trend, there are also those trying to short the down move, which may not be a wise strategy.
• 15:00 - 20:00: Homework Assignment: Identifying Liquidity Sweeps The chapter discusses the concept of liquidity sweeps in the context of trading, specifically focusing on the behavior of market participants when shorting. It explains that traders who short expect their strategy to fail if the price exceeds a certain high point, resulting in them exiting the market. The chapter emphasizes understanding how both exits and entries into the market occur when such price points are surpassed, highlighting the dynamics at play during liquidity sweeps.
• 20:00 - 22:30: Conclusion The chapter discusses the concept of creating liquidity in financial markets. It emphasizes the role of banks and institutions in filling orders to change market directions. The process is illustrated with the impact of price pushing above a high, resulting in people being stopped out and buying simultaneously. This leads to a situation where no clear winner emerges, as liquidity is created by liquidating participants and triggering buying actions.

Boot Camp Day 10: Liquidity Pt. 2 Transcription

• 00:00 - 00:30 yo what's good welcome to boot camp day [ __ ] 10 I think right yeah I think day 10. um so you guys know that uh last day that we talked about trading we were talking about liquidity just kind of what it is and why we would want to use it in the market so this is liquidity part two okay um and this is just going to be how to spot it in the market and where it lies within the market and then finally right
• 00:30 - 01:00 I want to take it like one step at a time so you guys can like have time to process and like understand what's going on um and then after all that goes down then um we will be able to get into how we can actually take trades off of it and then if that doesn't make sense don't worry because we will have way more time to discuss strategy and actually executing on trades once we start learning more things okay so today we're going to just talk about where it lies and then pairing that with you know
• 01:00 - 01:30 why we want to know where it's at and also understanding it and then from there like it should be kind of self-explanatory as to how to take the trades but we'll still discuss that um in two days so right let's do a quick little overview of what we talked about why we want to use liquidity um number one that's where orders are going to be filled right um that's where the banks are going to be moving the market that's where they're going to be able to fill their
• 01:30 - 02:00 orders and actually push Market in whatever Direction they would like to okay and then again how do they get these orders to be filled they have to have people exiting the market and then they also have to have people going in the opposite direction of them right just like we said two days ago it's an exchange if they need to fill millions of orders they need millions of orders to be going in the opposite direction so that leads us into today's video talking about where liquidity lies so where are all those people going to be going in the opposite direction of the banks and
• 02:00 - 02:30 institutions okay where and who is stupid enough to do this where is it happening when is it happening all that good stuff okay so let's just talk about right Basics remember when we talked about Trends how do Trends move higher highs higher lows lower highs lower lows so it's safe to assume that Traders like retail Traders will see oh hi
• 02:30 - 03:00 higher higher high higher low higher high higher low they see that it's trending right and they know that the trend is continuing when the high gets pushed above right confirming that there's going to be a higher high right so what most retail Traders do oops what most retail Traders will do is they see oh higher high higher low oh they see that the high gets pushed above that either have buy stops which is literally just pending orders right
• 03:00 - 03:30 above the high so right the price point would be like right above here and when that gets hit boom order gets executed they get filled okay and they're assuming that price is going to continue in that Trend okay now on the contrary there's also stop loss orders right above these highs as well right because there's there's people that are trying to short this down move which isn't necessarily smart right you want to trade with the trend which is what the people that are buying up here are trying to do but there's also people who are shorting within here right and
• 03:30 - 04:00 if we know right same same thought process right when people are shorting they know that their idea will be invalidated if if price pushes Above This high right so they would be exiting the market if this price points get price point gets hit okay hopefully you're starting to understand and see where I'm what I'm trying to get at with this is that when this High gets gets hit when this High gets pushed above people are getting out of the market and people are getting into the market which
• 04:00 - 04:30 is essentially creating liquidity for a potential for the potential for these Banks and institutions to fill their orders to change Market Direction and you're probably saying well tjr if if price pushes above a high and people get stopped out and then also people are buying that means nobody won exactly they literally liquidated all of those people and they will they aren't right because right when it pushes above people buy right people are get buying
• 04:30 - 05:00 and then boom gets taken out there and their stop loss is right under here right the people that got stopped out they get stopped out by a couple Pips and then boom Market moves in their favor that's why trading is so difficult because lots of people are trading like these retail or like just these these basic ways to trade and that's I mean some people are successful with it but I genuinely think that they're successful because of their experience in the market rather than the way that they're
• 05:00 - 05:30 actually trading um and that's why I really like playing off of liquidity um and and understanding that so right we know that there are going to be stop losses above highs we also know that there's going to be buy stops above highs so that means boom when these highs get taken out in an uptrend right there's going to be people going long there's also going to be stop losses above there right so when that happens right that gives the banks and hedge in in these institutions the
• 05:30 - 06:00 opportunity to fill their orders and then send Market in whatever Direction they want which is usually to the downside now let's talk about it in the other direction right in a downtrend it's the same thing just vice versa okay when lows get taken out in a downtrend people are going to have sell stops right they're going to have sell limits sell stops down here right because they know when a low gets taken out odds are the trend will continue okay so right and we talked about during our Trend session or a trend video Trends
• 06:00 - 06:30 don't last forever right so that's why when we use liquidity we're able to catch the top of a downtrend or the bottom of an uptrend because we are literally getting into the market hold up I got my friends talking outside so I gotta mute them out but we are literally getting into the market um at the beginning of a trend and that's why we're able to catch these big moves okay
• 06:30 - 07:00 so when we see that happening okay we take note of it okay so we know that underneath lows there's going to be cell soft and then again on the contrary the people that are trying to catch a Buy on this like mini little move up their stop loss is going to be underneath the low so right when that low gets taken out okay in a downtrend people are getting liquidated people are also going going short taking cell positions here and then that gives Market the opportunity to fill orders within here Order block
• 07:00 - 07:30 we'll talk about that later right right this whole thing would be essentially an order block I don't want to get you guys confused but right this this move down here is what causes the liquidation and then allows Market to fill those orders okay so let's go into the chart and actually show examples of this now and it's very very easy literally jumps off the page look okay uptrend what's this High boom sweep
• 07:30 - 08:00 downtrend okay we're not gonna get too analytical with it and guys this happens on every single time frame okay right uptrend sweep of the highs collapse okay this happens on every single time frame every single time frame ready let's go to the Daily let's go on the S P there's great examples of this on the s p 500. what's this right here this is on the daily time frame guys we have highs
• 08:00 - 08:30 right here boom push up takes out liquidity big sell-off what's this right here we have highs right here boom Market pushes up big sell-off let's do it so far so easy man it's very it's very very easy and it's like you're going to be able to see this on every single time frame it so that's that's also what your homework is going to be is literally just finding these these situations where a high or low
• 08:30 - 09:00 a high or a low in whatever Trend it's in gets taken out and then price rallies look okay ready wanna see wanna see something crazy look at this low low you're probably saying oh no no it's just going down wait a second go to the monthly sweep look what did he got taken out if we go to the yearly time frame that is a massive liquidity sweep right
• 09:00 - 09:30 what's Market probably going to do probably going to reverse and that also coincides with the with the US dollar being extremely weak right now it's it's it's actually amazing how these markets move and how these markets work ready and and again I don't want to get too deep into strategy but this doesn't only happen on on these high time frames it happens on literally every single time frame ever okay so if we if we go on to like
• 09:30 - 10:00 find where Market opens or let's actually do it on like uh gu let's find um let's find like um
• 10:00 - 10:30 okay this is this is Asian session okay I don't want to get too deep into this because this is again we just want to talk about liquidity and be able to spot it within the market but as we can see right we have a mini downtrend right we break structure to the downside take out these lows rally we break structure back to the upside price pushes higher okay like it like we could we could find this type of [ __ ] on on the 15 minute
• 10:30 - 11:00 as well okay and in in when you guys get good at it when you guys get good at like spotting this it should be like super super easy to see and understand where this happens right it should just jump off the page boom sweep fall boom sweep fall let's try and find something to the upside and the way and the reason why I love this is literally
• 11:00 - 11:30 boom sweep rally like when you guys start to see this stuff like it it literally jumps off the page sweep rally and that and then what does it do to the upside sweep fall it's how the market moves you guys the market is unable to actually move in the direction that it wants to without taking out liquidity to fill the orders okay this is why I love the way
• 11:30 - 12:00 that I trade because it it literally makes sense you are not playing off of a floor getting bounced off of or you're or it's touching the ceiling so it's going to go down no we're actually understanding why the market is moving and when it wants to move in whatever Direction like this is literally going to be your homework I I don't really have much else to say on this video besides open up your chart and literally just go on okay
• 12:00 - 12:30 yeah sure we can we can literally just call it right here open up your chart this is going to be your homework okay open up your chart go on three different time frames and find five different liquidity sweeps on three different time frames okay that's all you need to do okay do it on whatever time frames you want daily four hour one hour one minute five minute 15 minute because you will see these happen time in and time out bro like look
• 12:30 - 13:00 sweep push it's not accidental and it and it's funny because like you could you could say like oh like you're just cherry picking like it it's all over bro trust me when you guys do your homework you will see that this [ __ ] is everywhere like it's very very apparent and it's super super easy to see you can even put it on the weekly bro
• 13:00 - 13:30 fall what happened right here what rap happened right here on the monthly time frame oh there's a monthly low sweep what happened breaker structure the upside on the weekly rally it's not accidental and it happens on every single [ __ ] time frame and guess what guess where we're at right now on the monthly time frame add a big high this candle is yet to close Okay this
• 13:30 - 14:00 candle is yet to close it has 28 more days my guess oh yeah oh yeah we got some liquidity and the and in just having some knowledge about the US market and the US economy in general I wouldn't be surprised if we do whoop just down into the [ __ ] pits Okay so that being said now we know how to spot liquidity we understand what it is and
• 14:00 - 14:30 then in two days we'll get into how we can like take a trade okay I don't want you good guys to be like I know liquidity here I'm gonna take trades because it's not just liquidity you need to know a lot more than just liquidity and break of structure to be able to to be able to form an actual bias and be able to take a a actual high probability trade but this is going to get you guys to the point where you guys can start spotting this on the chart and there's a reason why we introduce this concept first because it's the hardest one to grasp
• 14:30 - 15:00 and okay and it's the hardest one to grasp but it's the most useful one to understand okay so once you can understand liquidity in the market it's wraps bro it is literally wraps it is raps okay so with that being said your homework choose three different times three different time frames five five examples on three different time frames okay choose whatever pair you want right it can be gold g g j g u s p doesn't matter you will find liquidity sweeps no matter what no matter what I guarantee
• 15:00 - 15:30 you without a doubt in my mind and if you can't you're doing something wrong because this isn't even like a come back to me and let me know if you can't it's like you are literally doing something wrong if you can't spot this because this is how I make money this is how thousands of other Traders make money right this is what this is how I ICT literally came up with this [ __ ] like it it works and it is in the market and it is how the market [ __ ] moves it's uh like it is how the market moves and and I don't care what you say it's it's
• 15:30 - 16:00 nothing else this is how orders flow this is how the ship moves and you can see it on the chart so that's your homework all right quick little day today all right get your homework done if anything you know keep going a little bit harder right make sure your motivation is up we got a new week ahead of us more things to learn more things to strive for all right let's keep it up and for the people that have stayed with me this far right we're already past week one so now it's really just the disciplined ones staying in here I know it's hard to keep up with a video every single day but hopefully you guys have
• 16:00 - 16:30 been able to do it um I appreciate you guys I got friends out in the pool and here I am making a YouTube video for you guys so hopefully you guys can appreciate uh the time that I'm putting in for you um it really does mean a lot um I've been seeing numbers go up and and I love to see it um I love to see you guys learning and I love to see you guys posting on like Tick Tock adding me on Tick Tock adding me on Instagram love to see it makes me very happy showing me that I'm making an impact on your guys life so with that being said I'll see you guys tomorrow peace out