Lesson 12 of 20 · 12 min
Liquidity Sweep
Also called Liquidity Grab, Stop Hunt
Step 1
What it is
Many traders place their stops just past obvious levels, such as equal lows. When price reaches those stops, a burst of orders hits the market. Traders call that cluster of orders liquidity.
A liquidity sweep is when price trades through the level, triggers those orders and then closes back on the other side. You may hear it called a liquidity grab or a stop hunt. That name can sound like someone is targeting you personally. It is usually just the market moving through a crowded level.
Traders watch for it because a failed break can show that the move had less behind it than it seemed. It also gives a very clear place for a stop: past the tip of the wick.
Step 2
See it on a chart
Equal lows are swept, price closes back inside, and a strong move breaks structure.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 3
The exact rules
What must be true before entry
- An obvious level, such as two or more equal highs or lows.
- A wick through the level, followed by a close back inside within one to three candles.
- A strong move away that closes past the last swing point.
What volume should show
Where to enter
Where the hard stop goes
Where the target goes
What invalidates the idea
- Price closes beyond the level and stays there. That is a break, not a sweep.
- Price trades past the tip of the sweep wick after you enter.
When not to take it
- There has been no close past the last swing point yet.
- The level was not obvious until after it was swept.
- Major news is due soon, or you would be trading outside your planned hours.
- You have just taken a loss and feel the need to win it back.
Step 4
Your turn: plan the trade
Price swept a pair of equal highs, closed back inside and broke structure to the downside. It has now pulled back. Mark your plan.
This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 5
The trap: moving your stop after a sweep
If you have been swept before, you will want to widen your stop next time, or to take it off altogether. That is how a small loss turns into a big one. The wider stop has to be built into the plan, with a smaller position, before you enter. Once you are in the trade, the stop stays where it is.
Read about revenge tradingStep 6