Liquidity Refresher and Market Structure

Flashcards covering liquidity, market structure, and trading strategies discussed in the lecture.

What is liquidity in the marketplace, according to the lecture?

Liquidity is the blood of the marketplace, where orders are residing and money is available.

What are the three main types of liquidity discussed?

Buy side liquidity, sell side liquidity, and trend line liquidity.

Where is buy side liquidity typically found?

Above price, in the form of buy stops or stop losses, often at relative equal highs, old highs, accumulation ranges, or retail resistance.

Where is sell side liquidity typically found?

Below price, in the form of sell stops or stop losses, often at relative equal lows, old lows, accumulation ranges, or retail support.

How do smart money traders use trend line liquidity?

They anticipate when the trend line will break and seek the first low or high that was made, using it as a target for their trades.

What does the algorithm refer to in trading?

The coded program that delivers price; it seeks liquidity and inefficiencies in the market.

What is the retail trader's perspective of support and resistance?

They see support as a level where buying occurs and resistance as a level where selling occurs.

What is AMD in trading context, and what does it stand for?

AMD stands for Accumulation, Manipulation, and Distribution. It outlines how price goes for one level of liquidity and then trades towards the opposite side after mitigating the first level.

How do retail traders typically trade trend lines?

Retail traders buy uptrend lines each time the price touches it, anticipating a continuation of the trend, while they sell downtrend lines expecting the price to continue downward.

According to the lecture, what should traders look for instead of solely trading breakouts?

A market structure shift and evaluation of confluences to determine if attacking relevant liquidity levels is justified.

What is the role of news events in trading according to the lecture?

News events can be used to identify potential liquidity sweeps and market reactions, but trading based on news requires skill and understanding of market behavior.

What is the significance of charting patterns like double tops/bottoms and head and shoulders?

Charting patterns highlight where retail traders place stops, providing smart money traders with insight into potential liquidity pools.

How does the lecturer define 'internal' vs. 'external' liquidity?

Internal liquidity refers to liquidity within a smaller range, while external liquidity is the larger, more obvious pool that the market aims towards.

What is the suggested approach for trading news events?

Either trade five minutes before the news release or after the release once a level of liquidity has been taken.

What is the key takeaway regarding the high of the week after the NFP release?

If the high of the week is reached due to NFP and then there is a change in delivery, price will target sell-side liquidity.