Master the "Institutional Trap." Learn how price intentionally pierces support and resistance levels to trigger retail stops and fuel the market's next move.
Liquidity is simply another word for resting orders. Retail traders typically place their stop-losses just above obvious resistance or just below obvious support. Institutions know exactly where these stops are. A liquidity sweep occurs when the price quickly breaks through these obvious levels to "sweep" (or trigger) those stop-loss orders, generating the liquidity (buying/selling power) needed to fill the institution's large position in the opposite direction.
Stop placing your stops directly on obvious levels. Give your trade room to breathe or use "time-based" stops (where you exit if the price doesn't move as expected after a certain period) rather than simple price-based stop-losses.
Yes. This is a common strategy for advanced traders: they wait for the "sweep" to happen, wait for the price to reject, and then enter a position in the direction of the rejection, effectively "following" the institution that just created the trap.