How to Utilize Equal Lows Part 1

12 Jun 2023 · 1 min

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In this segment Roman Ceccardi explains the concept of "relatively equal 1‑day lows" on a price chart. He points out that when two daily lows are nearly the same, they signal a concentration of liquidity that market makers are likely to target. Market makers will push price back to those levels to absorb the liquidity, which can cause traders who entered long positions near those lows to receive a quick, short‑term profit (a "free ride") but also exposes them to the risk of being stopped out when the market maker reverses the move. The speaker warns that while such moves can lift price into the mid‑$20Ks, they ultimately benefit the market makers because losing trades fund their positions, whereas winning trades are paid out of the makers' own capital.

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And the first thing I want to bring to your attention is going to be these 1-day relatively equal lows over here. Now, if you take a look at these 2 yellow circles here, you can see that these 2 lows are very equal. And if you remember what I said in the beginning of the video, every time you see relatively equal lows, you always want to assume that there is a lot of liquidity here, and the market makers are going to be very interested in bringing the price to that level to take out all that liquidity. Because I want you to think about it this way, by the way, anybody who got, you know, went long at any of these points here basically got a free ride back to the mid-$20Ks, $25K, right? And that's not good for the market makers because whenever you win a trade, they are paying you out of their own pockets. But whenever you lose a trade, your money goes to them.