Liquidity
Why price hunts stop losses, and how buy-side / sell-side liquidity drives smart-money moves.
Liquidity is what we always look at as ICT / SMC traders. Market makers mostly target the stop losses of retail traders. Retail relies on concepts like support, resistance, and trendlines, often with indicators. We read the chart naked, without indicators, and focus on where that liquidity sits.
Buy-side vs sell-side liquidity
Resistance (highs) holds buy-side liquidity (BSL): the stop losses of shorts and the buy-stops of breakout traders sit just above it. Support (lows) holds sell-side liquidity (SSL): the stops of longs sit just below it. When that liquidity is 'taken out,' the orders there are cleared, and that's exactly when smart money enters the other way.
How retail sees it (RTS / STR)
Retail traders expect a broken resistance to become support ('resistance turn support'), and a broken support to become resistance ('support turn resistance'), then trade the bounce. Smart money uses that expectation: the 'break' often just grabs the liquidity resting there, then reverses.
Two equal highs line up at the same price, building a pool of buy-side liquidity (BSL) just above them.
Spot it: Two highs at the same level = a BSL pool sits just above.
Breakouts are often traps
When a 'resistance breaks,' retail buys expecting continuation. Often it doesn't truly break. It only takes the liquidity, then reverses. Identify liquidity first so your entries land on the right side.
The sell-side mirror
The same trap works downward. When price breaks BELOW support, retail shorts the 'breakdown' and longs get stopped out, that is the sell-side liquidity (SSL). Once it is taken, price often reverses UP and the new shorts get trapped. Same game, flipped.
This is why it is called manipulation: both the buy side and the sell side can be swept to trap traders on either side. The real sequence behind it is accumulation, then manipulation, then distribution (AMD). The sweep is the manipulation; our entry comes in the distribution that follows. We'll go deeper on AMD in later topics.
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