This SIMPLE liquidity concept changed my trading forever

So let's just picture this together. You do your analysis, you mark up your points of liquidity, you wait for the liquidity to sweep, you see your confirmation, and then a few minutes later, stop loss gets hit. You can't quite figure out why so many people can trade this liquidity concept and make a ton of money, but you can't seem to pick the right points of liquidity to trade. I've been there, I've done it. I know a lot of people struggle with this, so in this video I'm going to talk about this one key liquidity concept that pretty much stopped me losing Liquidity Sweep trades. Pretty much, for the most part. I mean, obviously there's some losses here and there, but for the most part it stopped me from losing. So let's get on to the charts and let's break this down. So first and foremost, we have to understand here the purpose of liquidity. We have to understand the purpose of liquidity. So when it comes to liquidity, the way that I like to teach liquidity— liquidity is fuel for the market. Liquidity is going to be points within the market that is going to freely allow orders to come in. And when orders come in, what happens? Volume increases. When volume increases, that's when a move happens. So what we have is we obviously have a line here, we see a liquidity sweep, and then we're anticipating it's going to create a reversal. What we need to understand here is that liquidity essentially has two jobs. When orders can move freely between points of liquidity, it does number one, allow entries. So we have entry liquidity. And then number two, we will have exit liquidity. Now, the big problem that most people have when it comes to trading liquidity is they, they end up being part of that exit liquidity, right? They end up being the guys that get in on this move here. And expect this move to happen, but it doesn't. They're anticipating that this exit liquidity move is going to happen the same as this entry liquidity move. So how can we mitigate the risks of finding exit liquidity? Listen, liquidity is very, very powerful. However, like anything, you have to know when and where to use it and when not to use it. So this is where I I have identified and used the concept of primary and secondary liquidity, right? Understanding what is the use of this liquidity within this period I'm trading. Okay, so let me show you some examples of primary and secondary liquidity. So the sort of cycle that I will tend to, I will tend to lean towards is through any session, so London session, New York session what you're typically going to see is that we will— I mean, actually, let's just do this right. So you're typically going to have sessions going to open, we're going to identify, we're going to try and drive into entry liquidity. We're then going to have this, which is what I'm going to mark out as our— that's not the right one. This is our primary move. Okay, primary sweep, should we say. Not spelled that right, but I can't be bothered to change that. So we have our primary move, we have our secondary sweep, and then what are our expectations around this? In fact, let me move this over here. So we have the primary sweep, which is that initial run of liquidity for the day, and it has the intention of creating the move. We then have the secondary sweep which if we understand them, we can identify this. Our expectation should be that this is going to allow for people to exit the positions, right? They use liquidity to get in, they, they use liquidity to get out. But this secondary sweep is unlikely to create— I mean, there's a caveat to this which we'll get into, but it's unlikely to create the same reaction as a primary sweep. So the expectation from this secondary sweep is that yes, we will likely see a reaction But what is then likely to happen is we are then likely to fail. Now again, you might have— you might sort of start putting the pieces together because I've got a video on this already where we can utilize this primary sweep to give us our directional bias for the session. So if our conclusion is that that primary sweep is going to give us our directional bias, if we can identify this, we can stop ourselves being caught out by these secondary sweeps on liquidity because our expectation should not be the same. Our expectation should be that this will fail because it is a secondary sweep of liquidity, and therefore it's not going to have the same intentions as a primary sweep of liquidity. So I see so many times that people are literally just looking for sweep of liquidity, confirmation, taking a trade. But there's more to it, right? You can't just trade a concept and a concept alone. It has to be part of a bigger picture. It has to be part of a cycle. So So looking at something like this, we're going to see that, okay, the market might consolidate. Session's going to open, we're going to identify and we're going to take our primary sweep of liquidity. That sweep of liquidity is going to create the anticipated, anticipated reaction, an anticipated move. That secondary sweep of liquidity, which again is likely to come, is either going to be our exit, or if we're maybe slightly more advanced or we that way inclined, we can utilize that secondary sweep as a point where we know that what is going to happen, we're likely to react, okay? So it's going to create a pullback, but the probabilities are it's going to fail, okay, depending on, on the circumstances. Again, we'll go into that in just a moment. So, so many people get into these secondary runs of liquidity, and you can see this happen time and time and time again. So again, what you're then likely to see is London session is going to open, London session is going to create this move, we don't want to take the secondary move, but what this will then in turn do it might then create additional liquidity here from the pullback it has created. The reason why this secondary move doesn't necessarily create the same reaction is, number one, because this is likely to give out directional bias for the session, but number two, because this is exit liquidity. So anybody selling here, or a portion of the people selling here, are exiting their trade here, okay? So which means that the imbalance of buyers and sellers does shift, which is why we get the reaction, But because buyers are— because a high volume of buyers aren't necessarily stepping in here, we don't see the same reaction. So what's then going to happen is we're going to see London session create this expansion like this. We want to take this, we don't want to take this. You might then see price drops between 10, 11, 12 o'clock. And then what's going to happen next? New York session is going to open. What are we then going to do? We're going to have a secondary, okay, or another primary run, right? Because we're in a new session. So what happens is we have our primary run of liquidity for the New York session. That primary run is then going to create another move that is very, very similar. So we can expect something like this to happen, and we want to be taking this trade. But again, what then happens? You get so many people that look at this as a market structure shift, they look at this as potential liquidity, and what do they do? They try to buy out of this low expecting the same reaction. But it doesn't happen because this is primary and then this becomes secondary. Okay, so the concept of primary and secondary is so, so, so important. Not all liquidity is the same. Not all liquidity is going to create the reactions that we are looking for because liquidity isn't just an airy-fairy concept in the market. It is what allows orders to come in, okay? And orders come in for a reason, intentionally to create moves. Liquidity is fuel for the market, okay? You take fuel to go on a journey, okay? You go to the— you go to the petrol station to fill up your car so you can go on a journey. It's the same as this liquidity. So we don't want to try and fight that journey. If the intention of this fuel stop here is to push us into lower prices, that second fuel stop is unlikely to do the same thing because we have primary and we have secondary runs, right? You might have a big long journey, right? If you're, you're intending to get from— I mean, let me, let me do a bit of artistic work here. Your petrol station, one here. Actually, let me change that. So your journey is, is this, right? This is the journey that you're looking to take in them— looking to take, right? You're looking to drive from Southampton to Scotland, right? So you know, okay, if I want to make this journey here, I'm going to have to start by going to the petrol station and filling up my car. Okay, you might fill up your car and that allows you to continue your journey on only so far before you then need to fill up again. So what do you do? You fill your car up again. You don't then just turn back and go back to the— back to your original destination, right? You don't just go back to where you started that journey. You refuel, you're going to pause for a moment, you're going to go into the shop, you're going to go and get some snacks, you're going to go and pay for your fuel. And then what are you going to do? You're going to continue your journey to your end destination. The same thing is happening here with liquidity, where we go and grab our fuel, we move in our intended direction for that session, we might take a secondary fuel stop, but that doesn't mean our journey and our destination is changing. We are still looking to go lower. So we have a small reaction, we have a small pause in the market before intending on our original, uh, destination, right? So it's very, very simple. You have to be able to identify primary sweeps of liquidity and not secondary sweeps of liquidity, because this is why you keep losing trades from runs of liquidity. Now again, on a textbook it is much easier to see this, but that is why I'm a big believer that you need to focus on one strategy. You cannot chop and change and do multiple different things, right? This is not— becoming a good trader is not a jack of all trades thing. Becoming a good trader is about being a specialist, not a generalist. So you have to be the best at one single strategy in order to trade that to a level that is optimal. It's so, so important. So let's, uh, let's jump and have a little look at a few examples here. This is like the price action for the last week or so. It's a pretty good example here. So looking at— I mean, for example, let's look at this price action here. So again, there's not really much in London session, but really more so we're looking here at the New York session. So What is going on? 1 o'clock, so from this point here we can see that the session then opens. What does the session then do? It goes and finds that primary run of liquidity, right? So you have a nice early run on liquidity, nice and early on in the session you have the primary run of liquidity. What do we expect that to do? Create the directional bias for that session, okay? So this would be a, this would be a move that we'd want to, want to be taken. Expecting that move to the upside. Where do we then go? We then go to those secondary points of liquidity at these highs, okay? So there would be so many traders here that are expecting this to happen from here, but why doesn't it? Because it is not a primary run of liquidity. There is not the same intention behind this secondary run. So this one here, fantastic, you can look to take buys out of this low and you can look to exit from here. But if you miss this trade, you should not be trying to jump into this position and expecting the same reaction because Again, it's a secondary move. So what happens, we see the reaction, but what ultimately ends up happening is it ends up failing, or it doesn't get anywhere, right? We just have a small pullback, we don't get anywhere. And again, the whole point of liquidity is that liquidity moves from liquidity to liquidity. That is how liquidity is processed in the market. Exit to— exit to entry to exit liquidity, right? Buy side to sell side, sell, sell to buy side. That's all it does. That's all the market does. But you have to understand those models that play out. Again, let's move here. So this was actually a trade that I took. It's actually a trade I took this week. Was this this week? Yeah, 7th, a few days ago. So again, what have we got? Obviously got the Asian session range there. We can see the market opens around these candles here. What do we do? Go and run into this primary level of liquidity. Again, this is minor structure liquidity, but liquidity is liquidity. We cannot judge how strong or weak a point of liquidity is. We have to objectively know where liquidity is in order to identify where these points can come from. We should not be discretionary in the way that we trade them. It either is or isn't liquidity. Just flow with the market, react, don't predict. So again, what do we do? We run into here on the Frankfurt open, we have that primary run of liquidity. What then happens? We give ourselves a directional bias. What is then likely to happen is, right, people are off the ball, they're slow to start. What do they then do? They wait for this liquidity to be run and they expect to have the same reaction, but that does not happen because why? It's a secondary run of liquidity. So therefore, what do we see? We see the reaction, but ultimately what happens is this fails and we continue lower. Why? Because this is the primary run and it's given us a directional bias, right? We want to be in this We don't want to be in this. We have to identify if this has happened to mitigate the risk of taking this position. And again, we can see here that this is, this is confirmed that this is happening because of the expansion that we've seen, right? Again, we'll get on to a caveat in just a moment, but run the liquidity, good expansion. So on this position, I actually ended up exiting here. I came out of that low, right? I'm not really bothered about by taking this whole move because again, we've had like a bullish shock in there. This could end up being reacted to, whatever. But I'm in and I'm out and I'm done and I'm dusted because I'm just trading those primary moves and I'm taking, I'm taking what I can off the table. I mean, I could have gone to this point of liquidity because, yeah, this is not really liquidity, but I could have taken and extended my, my target to this point because this is like the next major point of liquidity. But I wouldn't be buying from this point because I've already identified where that primary run has come from. Okay, that's the key thing here— understanding primary and secondary liquidity. Again, very, very similar here, right? ASR highs get taken, the session opens at 7 o'clock. What happens? We run this internal point of liquidity. And what does that do? It gives us that directional bias for the session. What do we then not want to do? We don't then want to try and trade from this point, don't want to try and trade from this point, because therefore it's not going to give us the same reaction within that session, right? This run of liquidity here gave us That primary move, that directional bias for the session, right? And yes, we can see that we ended up running above this point and had a substantial move lower. But if we look at this, 11 o'clock was the session end. So this candle here, what is a bigger move from this low to this high or this high to the low of this candle, right? This is the primary move. This is what we want to be in, right? And we don't want to be sitting here for hours and hours and hours waiting for a trade, right? The market has intentions. If it's going to run from liquidity, it's going to do it in and around the open. It's going to give us a directional bias for that few hours of the session, and then it's going to die off. And we want to be prioritizing those primary runs of liquidity. It's so, so, so important, right? We want to be in this. We don't want to be in this. We don't want to try and trade this. Again, you can predict these things are happening, right? You can predict when a point liquidity is going to fail. It becomes obvious when you start to prioritize thinking about these concepts and not just looking at things in a super, super basic textbook manner, right? You have to understand what you're actually trading, and it's not just sweep liquidity, confirmation, take a trade. It's not just that, because everybody can trade that, but not everybody understands the true concepts behind what we're looking at here. And again, like, this might sound super confusing if you don't trade liquidity or you don't even look at these concepts. It might sound confusing, but when you actually get rid of all of the noise and you get rid of all of the crap that you're thinking about, it It's very, very simple. It's very, very simple. What else have we got here? So again, we can see session opens at 7 o'clock, 7:45, you run into that point of liquidity there. Then what happens? We move to the downside. Okay, what do we then not want to do? We don't want to try and buy from this low here. We don't want to try and buy from this low here. Why? Because the directional bias has already been put into the market. Okay, very, very important. Okay, we look at the New York session here again. So if we look here, what's this? So this is 12:45, you run this point of liquidity. So we already run away from it, um, we already run away from it prior to, uh, prior to that session starting. We then run into this point of liquidity here, we have a nice reaction to the downside and We can see here that we're really just bouncing between points of liquidity, okay? But ultimately, session opens, that first run of liquidity comes at quarter to 3, so fairly late on in the day. Actually, that's earlier than that, it's quarter past 2. We have this move to the downside, right? So I'm going to trade that primary move, okay? That is the move I can get in and I can get out, okay? You then have here secondary run of liquidity, and yes, you could potentially try and trade this, but then what happens? In order to trade this to the next point of liquidity, which is ultimately up here, because again, this liquidity has already been utilized. You can get into the market here and have your targets here, but what then happens? We pull back, you've got taken out the trade anyway. So if it's like— if you're looking at these secondary moves, they ultimately end up not playing the way that you want. You want to get in, you want to get out of the market. So when you start messing around with secondary runs of liquidity, it doesn't play the same way. It doesn't play the same way at all. So let's see if we can get any more examples. And again, not always does it work, okay? Not always does this play out. However, any strategy that actually gives you an edge is never going to be 100% win rate, right? So we can see here, session opens at 7 o'clock, we run into this primary point of liquidity. What happens? We have a reaction, we're able to get breakeven on this trade. And then it ends up failing, right? Sometimes this doesn't play out. However, probabilities tell us, and probability suggests that this is how the market is moving, right? Sometimes it's going to prioritize and move based on liquidity, sometimes it's not, right? That is just the cycle of how things move. So really, really key concepts. And to be honest, this is a concept that I really use as my primary thought process when I'm on the markets. I'm looking for that primary run of liquidity. Once that primary run has happened, whether I've been able to trade it or not, or whether I've got an entry or not, I'm not then going to jump into those secondary runs because I know that that primary run has likely put in a directional bias for the session. So really understanding the difference between a primary and a secondary run of liquidity within that session, right? This is about session, not daily training, session trading. I'm an intrasession trader. Is so important, and it will stop you taking a lot of these unnecessary losses, right? Understand what you're actually trading and why you're actually trading it. Don't just understand the entry and exit criteria, because you will get caught out. So I hope this has cleared some things up. If it has, let me know in the comments below, but I'll see you in the next video.