Where stop losses pile up, why price is drawn to them, and how to tell a sweep that reverses from a breakdown that keeps going. This free lesson covers: Where everyone puts their stop, Where is it?, Why price is drawn there, Name it, Bait and the real pool, Which low matters more?, Sweep or breakdown?, Which is the sweep?, Turning it into a trade, Where does the stop go?, Work it out, When the sweep fails, Put it together.
Going deeper
This lesson is the long form of the Liquidity Reel. Its chart is illustrative, and the 1 : 3 in the steps is recomputed from the stated entry, stop and target.
The ideas here come from Smart Money Concepts and older order-flow thinking, and the vocabulary varies between sources — "stop hunt", "liquidity grab" and "sweep" usually describe the same thing. What matters is the definition: a trade beyond the level and a close back inside it.
Not yours personally. Large orders need matching orders on the other side, and clusters of stops provide them. Your stop gets taken because it sits where thousands of others do.
Related but different. A liquid market is one you can trade in size without moving the price. Chart liquidity is the specific resting orders beyond highs and lows.
Not here yet. The rules are defined precisely enough to test, and the Backtesting lesson in this module shows how we would do it.
Strategy Playbook · Learn · Step 1 of 13
Price bounces off a swing low. Everyone who buys that bounce puts their stop loss just below the low — it is the obvious place, and every course teaches it.
That creates a pile of orders sitting in one spot. On the chart it looks like empty space under a low. In the market it is a queue of stop losses waiting to be hit. That pile is what traders mean by liquidity.