Liquidity
Also called resting orders. What it means, how it looks on a gold (XAUUSD) chart, and the mistake most traders make with it.
Liquidity: In ICT and SMC trading, liquidity means clusters of pending orders, mostly stop losses and breakout entries, resting above highs and below lows. Price is drawn to these levels because large orders need that volume to fill.
Liquidity on a gold chart
If gold has bounced twice from $4,080, many buyers have stops just below it. That pool of sell orders under $4,080 is sell-side liquidity, and a quick drop to $4,076 before a rally is a common way for it to be taken.
How traders use it
Traders mark obvious highs and lows as targets (where price is likely to go) and wait for a sweep of one side before trading toward the other.
Common mistake
Placing your own stop exactly at the obvious level. If everyone's stop is at $4,079.50, that is precisely where price is drawn.
Questions
What does liquidity mean in trading?
In ICT and SMC trading, liquidity means clusters of pending orders, mostly stop losses and breakout entries, resting above highs and below lows. Price is drawn to these levels because large orders need that volume to fill.
How is liquidity used on gold (XAUUSD)?
Traders mark obvious highs and lows as targets (where price is likely to go) and wait for a sweep of one side before trading toward the other.
Educational content, not financial advice. Every concept here is a probability, not a guarantee.
Related terms
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