A trader ranks three ways to set profit targets: daily highs and lows, value-area highs and lows from volume zones, and liquidity clusters in the order book. He argues liquidity areas are most reliable for knowing where price will pause or reverse.
You enter a trade, you put a stop loss below the low, but where do you take profits? Here's my top 3 favorite ways as a professional trader. Third place, daily high and lows. If you catch the trend, that's a high probability area to be reached by price. Second place, value area highs and lows. These aren't support and resistance areas based on price. They are based on where most money was traded in the markets. And the first place: liquidity areas. Not lines you draw on a chart, but actual liquidity that you can see from the order book. Here's why that's a cheat code. If you see many liquidity levels one after the other, it's likely that price will pierce through them one by one. But if you see a big hot level up there staying for a long time, it means there's big sellers and price will tend to gravitate towards it because markets always seek liquidity. If as soon as the level is taken they reload more liquidity, is likely that we will reverse, so as a scalper is better to take profits. If you want to have a heatmap like the one I use, comment "liquidity" to join the waiting list.
