Understanding The Importance Of Liquidity Runs
Liquidity runs occur when price moves through important levels containing orders, potentially creating opportunities for continuation or reversal analysis.
CommunitySign in to join the conversation
Spot on. Liquidity runs happen when price sweeps key structural highs or lows where resting stop losses and pending orders sit, fueling either a fast continuation or a sharp reversal.
When trading with a prop firm, understanding these sweeps is crucial for managing your daily loss limits and avoiding false breakouts during high-impact news events. A sudden liquidity grab can easily trigger a breach if your stop loss isn't respected or if you chase the initial spike.
How do you personally filter out fake breakouts during these liquidity runs? Share your setups below!