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    Trading Free Guide On Liquidity

    Uploaded by

    arikalvarado1

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    © All Rights Reserved
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    Trading Free Guide On Liquidity

    Uploaded by

    arikalvarado1
    70 views6 pages

    Original Title

    Trading_Free_Guide_on_Liquidity

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    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    70 views6 pages

    Trading Free Guide On Liquidity

    Uploaded by

    arikalvarado1

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 6

    HOW UNDERSTANDING LIQUIDITY LEADS TO

    TRADING SUCCESS

    Trading made simple.


    1

    The concept of liquidity in the markets is widely talked about in the forex industry but not
    often does it get explained in enough detail for developing traders to fully grasp the
    concept and understand how to use it to achieve success in trading. In this free guide we
    discuss what liquidity is and how to use it to your advantage to achieve success in trading.

    What is liquidity?

    In simple terms, liquidity is the money within the market. It is the “fuel” used to
    move price from point A to point B. The goal is to place a buy or sell order once the market
    has enough fuel to move price from one level to another to fill these orders.

    Before placing a buy order, it is important to wait for sell side liquidity (stop losses) to be
    taken out first to fuel the move up. Similarly, buy side liquidity (stop losses) should be
    taken out before placing a sell order to properly catch the move to the downside. I will
    explain all of this in more detail later in the guide.

    WWW.RMTRADINGGROUP.COM
    2

    What is sell side liquidity?

    Sell side liquidity is the stop losses resting below old lows of traders who want to LONG
    the market. Similar to the idea above, we want to make sure the sell side is taken before
    we place a buy order in the market.

    Key areas of sell side liquidity are:

    ➔ Old lows (including weekly, daily and session lows)


    ➔ Equal lows

    WWW.RMTRADINGGROUP.COM
    3

    What is buy side liquidity?

    Buy side liquidity is the stop losses that are resting above old highs of traders who want to
    SHORT the market. So, in order for the market to make a significant move to the
    downside, these stop losses need to be taken out to fuel the move down. We want to see
    this happen before placing a short order in the market.

    Key areas of buy side liquidity are:

    ➔ Old highs (including weekly, daily and session highs)


    ➔ Equal highs

    WWW.RMTRADINGGROUP.COM
    4

    As you can see in the examples above, the move to the up- or down -side happens after the
    market runs through the key areas of liquidity. The move is then targeting liquidity in the
    other direction. We can use this information to look for areas to enter the market, as well
    as areas to target as our take-profits! This will increase your chance of a winning trade.

    Here are a couple examples of trades taken according to my strategy that I teach in the
    RM Trading program using the ideology that I just discussed.

    WWW.RMTRADINGGROUP.COM
    5

    Closing Remarks

    What you see in this guide is just the tip of the iceberg when it comes to using liquidity in
    trading. Liquidity is a very important concept to know as it is the fuel that drives the
    market. Once you understand it and learn how to integrate it with a strategy, you will start
    to see great results in the market.

    Using liquidity in trading is like a game. When we go for one side, we have to go searching
    for the other side. A clear run on liquidity should take place before we look to get in a
    trade - I can’t emphasize this enough!

    Practice applying liquidity to your trading through backtesting and forward testing to
    train your eyes to spot key areas of liquidity. By doing this, you will be one step closer to
    success in trading.

    WWW.RMTRADINGGROUP.COM

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