Core Month 04 05 Liquidity Voids - newsqlguru/ict-index GitHub Wiki

ICT Mentorship Core Content - Month 04 - Liquidity Voids

Key Terms

Liquidity Void (LV)
Price Gap (PG)

Content

When to anticipate ranges to fill in.
Liquidity Void is a range in Price Delivery where one side of the Market Liquidity is shown in wide or "long" one sided range or candles in one direction.
Price typically will want to revisit this "porous range" or void of contrarian liquidity.
When price is in a consolidation or small trading range we call this "Price In Balance" or price is at a point of equilibrium.
At some point price will move out of consolidation, creating an imbalance, this is displacement by Market Makers, it creates one sided price delivery.
- Liquidity Voids are also know as Price Imbalance or Displacement.
- Market Makers create this price movement, they are the only entities with enough equity to move the market out of consolidation periods.
- When we see a Liquidity Void created, it lets us know that Smart Money is in the marketplace and is anticipating price moving in a direction. Due to position size Smart Money will split their entry position into multiple chunks of orders, scaling in to their full position. In preparation for the larger price move.
  - A down close Liquidity Void is a void of Buy Side Liquidity.
    - The absence of Buyers. Price is being offered, repricing, aggressively lower before Buyers step in.
  - A up close Liquidity Void is a void of Sell Side Liquidity.
    - The absence of Sellers. Price is being offered, repricing, aggressively higher before Sellers step in.
Price can stay away from the void for some time and leave the range it creates open. The market will seek to close in the void at some future time.
- e.g Move to the range created by the imbalance and stay in that range rather than closing in the void.
Liquidity Voids occur when price is delivered on one side only, it can also leave a Price Gap in the void during this time.
- We can observe Liquidity Voids on multiple time frames to gain a better understand of the price action involved.
  - e.g. A single large displacement candle on a 5m chart will be made up of multiple candles on a lower time frame. We drill down to find one sided delivery and Price Gaps.
The market will want to reprice back through the void to balance price delivery, we don't know how long this will take.
If we anticipate price will close in the void.
- A level of stops will be created so that it can be run, once stops have been price may start to close the void.
  - Look for clean high/lows, double tops/bottoms.
  - Once found look for a liquidity raid before price action begins to revert or reverse.
  - Again we don't know the time this will take.
  - Price may also retrace back to the stop level and raid stops again to pair order before closing the void.
  - It may take more than one attempt too close the void.
When price trades to a key level (bsl/ssl/void close) multiple times, then trades aggressively away and creates a Price Gap, this is the market showing it wants to trade away from the level in the opposite direction.
- Creating an opportunity for a trade setup.
Price Gaps
- When we see a gap with no closure, meaning there are no candles closing in the gap. This creates a Common Gap.
  - The market is indicating a willingness to move in the one sided direction of the candles that create the gap.
- When we see a gap and we have an inclination that price will move in a direction we can put a limit order in at the gap.
- Stops at the top/bottom of the candles that created the gap.
- Target old high/lows from entry.
- These can be very low drawdown trade setups.
Note, Market Makers are scaling in positions, they can't enter the entire position at one time. This is why we see price returning to key levels, bsl, ssl, and then reverting to the other direction. Market Makers are scaling in and once the position is filled the price will move aggressively away form the level. This creates the Common Price Gap.

Notes

Find 10 occurrences in past price action and log them in your trade journal.
Extra credit if found on multiple time frames.