Where do sell-side liquidity pools usually sit?

Below obvious lows. Stops of long traders sit below obvious lows, called sell-side liquidity.

A liquidity sweep is typically a wick beyond a level followed by:

A close back inside the range. The sweep closes back inside, which is what signals a possible trap.

Why should you not trade a sweep on its own?

A sweep can be the start of a genuine breakout. Without confirmation you cannot tell a trap from a breakout.

Strategies School / ICT / Smart Money Concepts

Liquidity and Stop Hunts

Beginner · 8 min read

Understand where stop orders pile up and why price often spikes through obvious highs and lows before reversing.

What it is

Liquidity is resting orders. Stop losses of buyers sit below obvious lows (sell-side liquidity) and stops of sellers sit above obvious highs (buy-side liquidity).

Equal highs or equal lows are the clearest pools, because many traders place stops just beyond them.

A liquidity sweep is a quick move beyond that level that closes back inside the range. It often marks a trap for breakout traders, but it can also be the start of a real breakout, so wait for confirmation.

How to spot it

Mark equal highs or lows, and the previous day or week high and low.
Watch for a wick that pokes through and then a close back inside.
Look for strong movement away from the level after the sweep.
Do not trade the sweep alone. Combine it with structure (see the entry model lesson).

Trade plan

Entry: After the sweep and a confirmation, such as a CHoCH on a lower timeframe.
Stop loss: Beyond the sweep wick. If price accepts beyond it, the idea failed.
Target: The opposite side of the range or the next liquidity pool.

Common mistakes

Wrong: Placing your stop exactly at the obvious equal highs. Right: Give stops room beyond obvious levels, or size smaller.
Wrong: Selling every wick above a high. Right: Wait for the close back inside the range and confirmation.

Pro tip: The cleaner and more obvious the level, the more orders sit behind it, and the more violent the sweep can be.

Quiz

Where do sell-side liquidity pools usually sit? Answer: Below obvious lows. Stops of long traders sit below obvious lows, called sell-side liquidity.
A liquidity sweep is typically a wick beyond a level followed by: Answer: A close back inside the range. The sweep closes back inside, which is what signals a possible trap.
Why should you not trade a sweep on its own? Answer: A sweep can be the start of a genuine breakout. Without confirmation you cannot tell a trap from a breakout.

Educational content, not financial advice. Diagrams are illustrations, not real market data.