Liquidity is the most important concept for new traders. Markets move toward clusters of stop-loss orders, using them to fuel rallies, reversals, and fake breakouts. Understanding where these clusters sit lets you predict price direction and avoid getting stopped out before a favorable move.
If you're new to trading, learn this one word first: liquidity. Every rally, every sell-off, every fake breakout, it's all the market moving towards a cluster of stop losses so it can then use them as fuel for the next move. And once you understand this, the chart stops looking random. You start seeing why price bounced at that level. You start seeing why that breakout reversed. You start seeing why your stop got hit right before the market went in the direction you originally picked. All of that is liquidity. The market went to grab stop losses, yours included. The market moves to collect stop process. If you know where they're sitting, you know where price is going. Everything else in trading is built on top of that one idea. Learn this first and everything else will click faster.
