LIQUDITY 👨💻
Market liquidity is the price levels at which traders’ stop-loss orders are triggered and their transactions are liquidated. If a stop loss only limits a trader's loss, then liquidation takes away all the collateral for the position. Thus, the exchange makes huge profits
Liquidity may accumulate in large areas. This happens due to the same actions of market participants. A market maker or a major player can easily send the price to the level of liquidity accumulation and take a good profit. Often, liquidity accumulates when obvious patterns form on the chart, which many traders see and open a large number of identical positions, It is profitable for the exchange to liquidate them. The Smart Money trading approach allows you to understand! where the accumulation of liquidity may be.
In this example ( look at the picture ) you can observe a pulse breakdown of the upper boundary. Observing this, many market participants open long positions with stop loss orders at and below the triangle level. Next comes a sharp reversal and a rapid downward movement into the zone of accumulated liquidity.
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