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Market Mechanics Ep 13: Liquidity Concepts & Inducements — Transcript

by Brad Goh (The Trading Geek) · 9,801 words · 1,583 segments · language en · Watch on YouTube

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0:00Have you ever taken a trade and then see
0:02price started to reverse against you, go
0:05and sweep your stop loss, and then move
0:07exactly in your original direction? I
0:11know how frustrating that is, and a lot
0:13of traders think that this is just bad
0:15luck. It's not bad luck, bro. It is just
0:18the market seeking liquidity. It is just
0:21the market seeking the fuel it needs to
0:24move price in its desired direction.
0:28And if you do not understand how the
0:30market uses liquidity and inducement,
0:33you will keep getting baited into the
0:35wrong move before the real move actually
0:37happens. So, in this lesson, I want to
0:40break down liquidity concepts and
0:42inducements. These are, to me, the
0:45biggest game-changer
0:47in my trading. Like, when I really
0:49understood liquidity, and I started
0:51trading like someone who knows their
0:53which is really just spotting
0:55liquidity,
0:57the amount of times that I got stopped
0:59out reduced significantly, which also
1:02means that lesser losses. And when you
1:04incur lesser losses, you automatically
1:07incur more profits.
1:09So, if you don't understand where orders
1:11are sitting and how the market is drawn
1:13to them, you will keep on looking at a
1:16chart from a lens of a trader who is
1:19lost and inconsistent and is confused,
1:21right? The price action that is going on
1:23here just looks very random to you. But
1:26once you understand liquidity, like I
1:29said, it's the fuel, you start to see
1:31why price tends to sweep certain highs
1:34or lows or certain zones before making
1:37its real move. So, yeah, this is going
1:39to be a very, very important lesson,
1:41right? So, please make sure you pay
1:42attention from start to the end. I can
1:45triple guarantee you, if you really
1:47understand liquidity, you will just get
1:49stopped out so
1:50much
1:52less often. Does that make sense? Like,
1:54much less Okay, that it isn't a even a
1:57real phrase, but like you would just get
1:59stopped out a lot less frequently.
2:02Okay, I don't even know what I'm saying.
2:04But you would just get stopped out less
2:05often. That's it, okay? So, what is
2:07liquidity? Liquidity is where orders are
2:10resting in the market itself.
2:12It includes stop losses, breakout
2:15entries, and pending orders.
2:18Right? So, basically, stop losses or
2:20stop orders, and also any sort of like
2:24other orders where there is some form of
2:27liquidity right there.
2:28And it's basically the fuel for price
2:30movement.
2:32The market is often drawn towards these
2:34areas because this is where a lot of
2:36orders are clustered. Right? And this is
2:38where liquidity tends to be sitting at.
2:40So, the market is to sweep the liquidity
2:43and then move
2:45in the desired direction.
2:48So, like in this case right here, what
2:50happens is that if you try to enter for
2:51a sell over here
2:53without understanding liquidity, you'll
2:55most likely be placing a stop loss above
2:56this swing high right here. And then as
2:58a result, guess what? This is your stop
3:01losses, but this is liquidity for the
3:03smart money for the institutions. So,
3:05over here when price came down, there
3:06was not enough fuel, right? There was
3:08not enough liquidity for the market to
3:09just continue going down there to smash
3:11a TP. As a result, it needs to grab more
3:13fuel. And it's going to grab more fuel
3:16by going up there and sweep some
3:18liquidity above the swing highs, right?
3:20Which is where you place your stop
3:21losses, which is also where other retail
3:23traders tend to place their stop orders,
3:26and then reverse and hit back down.
3:28Right? So, in this case, this is
3:30actually a liquidity sweep.
3:33So, you might be wondering where does
3:35liquidity usually sit at, right? Like
3:37where can we find the liquidity that
3:39smart money need?
3:40Now, these are the areas, some common
3:43areas where you can find liquidity.
3:45Above a swing high
3:47and below a swing low. Okay? Above a
3:50strong high and below a strong low. Now,
3:53just think about it. When retail
3:55traders, they see like a swing high just
3:57like this at the end of our sell,
3:59because price is just reverse and hit
4:00back down, they're going to be placing a
4:02stop loss above those highs.
4:04Same thing for people who want to enter
4:06for a buy, they're going to be placing a
4:08stop loss below this lows itself.
4:11Same thing in this strong high and
4:12strong low right here, right? So,
4:15I want you to always assume that there
4:16is resting liquidity behind any high or
4:19low that has that price is not yet
4:20traded in the past.
4:22So, in this case, price came down, goes
4:24up, pulls back, and then goes up once
4:26again creating a strong low right here.
4:28Guess what? There is available liquidity
4:30over here.
4:31So, as long as price have not swept that
4:33price point, that is going to be
4:35liquidity.
4:37Same thing as equal highs and equal
4:38lows, these are very common chart
4:40patterns which a lot of you guys are
4:41taught to memorize, you know, if you
4:43enter for a double top, you should enter
4:45for a sell and place your stop loss
4:46above those highs. If you enter for a
4:48longs, when you see a double bottom, you
4:50should place your stop loss those lows.
4:52Once again, stop losses equal liquidity.
4:55Okay, not only are there stop losses,
4:57but there are also stop orders, which is
5:00pending orders. Because a lot of people,
5:02they might want to trade the breakout of
5:04this
5:05area right here, right? So, what happens
5:06is that they might place like a stop
5:08order right here, so that when price
5:10eventually goes up there, trigger their
5:12stop order, they are entered into a long
5:14position. As a result, you know, price
5:16can just continue going up and then they
5:17can benefit from this move to the
5:18upside. So, that's not just stop that is
5:21contributing to the liquidity, but
5:23there's also your stop orders as well.
5:26Okay, so, once again, that is just the
5:28fuel the market needs
5:31to move in a particular direction.
5:35And another area will probably be like
5:37trend lines just like this. Okay, so,
5:40once again, another very common retail
5:42concept is to, you know, when price is
5:44creating higher highs and higher lows,
5:45you draw a trend line below it just like
5:47this, connecting all the higher lows. Or
5:49in a downtrend, you draw a trendline
5:50connecting all of these lower highs. And
5:52as a result, a lot of retail traders
5:54placing their stop losses or stop orders
5:56below the trendline itself, guess what?
5:58That is untapped liquidity.
6:01Same thing as support and resistance
6:02levels, right? A lot of retail traders
6:04are taught to sell at resistance level
6:06right here. And when they do, they place
6:08their stop loss above the resistance
6:09level. And then when they are taught to
6:11buy at support level, right? Then they
6:13are taught to place their stop losses
6:15below the support level itself.
6:18The more obvious a level looks like to
6:21the public, the more likely liquidity is
6:23resting there.
6:25Okay, so
6:26if you want to get stopped out less
6:28often, you need to start viewing the
6:30market from the lens of a professional
6:32trader, rather than from the lens of a
6:34retail trader.
6:36Which means you need to do the opposite
6:37of what the sheep what the herd is
6:39actually doing.
6:41If everybody is looking for longs right
6:43here, you probably shouldn't be looking
6:44for longs. If everybody is thinking that
6:46you should place your stop loss below
6:47these lows right here, you probably
6:49should see that price point as
6:51a area where there is sitting liquidity,
6:53rather than placing your stop loss just
6:55like the herd.
6:56Okay? So,
6:58when you start to understand liquidity,
7:00what happens next is that you stop
7:02viewing the market from the same lens in
7:04which you have been viewing it for the
7:06past few months, for the past few years.
7:09Which also means you stop getting the
7:10same results.
7:13Yeah, so swing highs, swing lows,
7:15there's going to be liquidity,
7:16trendlines, support and resistance
7:18level, right? Very
7:20obvious swing points, there's going to
7:22be liquidity.
7:24Uh basically, like
7:26if a retail trader is placing a stop
7:27loss right there, then chances are
7:29there's available liquidity resting at
7:30the area there.
7:32Okay? So, now let's talk about another
7:34thing which is buy side and sell side
7:36liquidity, right? So, you can see there
7:38is liquidity right here.
7:40Now, this right here is what we call the
7:42buy side liquidity and this is what we
7:44call the sell side liquidity.
7:46Okay? So, let me just tell you what that
7:49means. Buy side liquidity is basically
7:52the orders that is sitting above the
7:54highs. Okay? So, this is the stop loss
7:56from sellers, people who enter for a
7:58sell right here, they place a stop loss
7:59above those highs. And then there is
8:01also going to be breakout buyers that is
8:03trying to enter above the high right
8:05here. Like I said earlier, if price take
8:07out this high, they're going to be enter
8:08for long position. So, as a result, all
8:10of these build up your buy side
8:12liquidity. Sell side liquidity is the
8:14opposite, right? It's the orders sitting
8:16below the lows just like this right
8:18here.
8:19So, these are the stop losses from
8:20buyers who are trading the reversal and
8:23also breakout sellers entering below the
8:25low, right? People who are placing their
8:26stop orders right here so that when
8:27price comes down, they get triggered for
8:29a sell position. So, this contribute to
8:32your sell side liquidity. Okay? Sell
8:35side liquidity and buy side liquidity.
8:38So, when price tends to run sweep above
8:40the high, right? So, price comes up
8:41there, sweep the liquidity above this
8:44high and then reverse, this means that
8:46it's taking buy side liquidity.
8:48And then in this case, if price comes
8:50down and sweep the low and then reverse,
8:53it means that it's taking sell side
8:55liquidity. Okay? So, just remember that
8:58below the lows is sell side liquidity,
9:00above the highs is buy side liquidity.
9:03And if you don't want to remember that,
9:04it's fine as well, right? Because I
9:07honestly don't even bother to remember
9:08it. I just name it as liquidity, right?
9:11Liquidity is just liquidity. It doesn't
9:12matter whether it's buy side or sell
9:13side liquidity, it's just liquidity. But
9:16obviously, if you're looking for shorts,
9:18you want to wait for price to sweep the
9:20liquidity above the highs. Right? You
9:23want to wait for price to sweep the sell
9:24side liquidity, not the buy side
9:26liquidity, right? So, in this case,
9:28liquidity right here, I want to see
9:29price take out the available liquidity
9:31above the highs, then I can look for
9:32shorts to trade the reversal to the
9:34downside.
9:35So, ideally, I want to see price sweep
9:37the buy side liquidity. And if I'm
9:39looking for longs, I want to see price
9:40take out the
9:42sell side liquidity, right? The
9:43liquidity sitting below the lows and
9:45then move in my desired direction.
9:48So, that my friend is the basics of
9:51liquidity, right? It's really just as
9:53simple as that. And once again,
9:56understand that if you cannot spot the
9:58liquidity, then you are most likely the
9:59liquidity.
10:02If you cannot spot the pattern, then
10:05chances are you're going to get trapped
10:06in the pattern itself.
10:09Let's talk about the logic behind this,
10:10okay? Why does price needs to seek this
10:13magical thing called liquidity?
10:16Remember, price need orders to move
10:18efficiently. Liquidity provides the
10:21fuel.
10:22Right? Which is why a lot of times,
10:24before a big move happens in the market,
10:27price need to come up
10:29to sweep some liquidity or come down to
10:31sweep some liquidity.
10:33Right? S- And this [snorts] will allow
10:35institutions to fill their large
10:37positions and cause price to move very
10:40significantly to the upside or to the
10:42downside.
10:43Okay, so once again, understand the
10:45logic behind it. If institutions today,
10:47they want to enter for a billion dollars
10:49worth of sell orders,
10:51chances are there is no one on the other
10:53side of the market that have that
10:55billion dollars worth of buy orders that
10:57is willing to, you know, that's able to
11:00fulfill their their billion dollars
11:01worth of sell orders.
11:03So, if there is no one that is liquid
11:05enough to do that, then guess what?
11:07Smart money institutions, they need to
11:08get that liquidity from the retail
11:11traders itself. So, as a result, they
11:13are going to manipulate price or
11:15whatever you like to call it, to induce
11:17retail traders, right? To enter in a
11:19particular direction, place a stop loss
11:22at that area right here, so that later
11:24on they can sweep the liquidity, right?
11:26Grab the liquidity they need to cause
11:28price to move in where they want to it
11:31to move to.
11:32Right? So, that's the whole logic behind
11:34liquidity sweep. It's basically the fuel
11:37smart money need in order for them to
11:40manipulate price and cause price to move
11:42either up or down significantly.
11:46Okay, so understand that nothing ever
11:49happens randomly in the market. Price
11:50doesn't just move randomly. Price needs
11:52to go up there, sweep some liquidity
11:54first, and then move significantly to
11:57the downside. Same thing right here. You
11:59can see price came down, sweep the
12:00liquidity below these swing lows right
12:01here, and then started to reverse and
12:03hit back up. Same thing right here.
12:05Price came down here. Guess what? We got
12:07your support level, and the price came
12:09down, sweep the liquidity below the
12:10support level, and then go up.
12:14Okay, so yeah, that's pretty much a
12:17liquidity sweep. You know what? Let me
12:19just share with you guys some examples.
12:21Let's try to apply whatever that we have
12:23learned here first before we move on to
12:25inducement, which is something that is a
12:28little bit more complicated. Okay, so
12:30let's try to identify some low liquidity
12:33on the chart right here. So, you want to
12:35train your eyes to spot these patterns
12:36itself. Remember, above swing high,
12:38below swing lows, above strong highs or
12:40lows,
12:42above equal highs, below equal lows,
12:44above and below support and resistance
12:45levels, and below and above trend lines
12:48itself. Okay, so let's train your eyes
12:50to spot the liquidity. So, in this case,
12:53let's just do it from left to right,
12:54okay? So, you can see price came up
12:56there, pulls back, swing high.
12:59Automatically know that there's
13:00available liquidity sitting above those
13:01highs. And just as expected, guess what?
13:04Price did not came down straight the
13:06way. There was not enough fuel for price
13:08to come down. So, as a result, smart
13:10money need to go up there, sweep the
13:11available liquidity, trigger the stop
13:13losses, you know, stopped out all the
13:15retail traders, trigger all the stop
13:17orders, and now they got all the good
13:20old buy side liquidity
13:23for it to cause price to collapse
13:25significantly. Right? So, this is where
13:28price swept the liquidity and then
13:30caused price to just move very
13:31significantly to the downside.
13:34And then later on, price started pulling
13:36back. Right, so you can see right here,
13:37price came down, pulls back, price comes
13:39down, pulls back, and then goes down.
13:42So, a lot of retail traders, they might
13:43draw a little trend line right here,
13:45right? A little good old trend line
13:46right there. And guess what? There is
13:48liquidity above those trend line. Or
13:50even just above these highs itself here,
13:53right? You can see price came down,
13:54pulls back, comes down, pulls back, and
13:56then goes down. So, this is a swing
13:58high. This is also a swing high. So,
14:00guess what? There is liquidity above
14:02these swing highs itself. And just as
14:04expected, price came up there, swept the
14:06liquidity above the swing highs, and
14:08then caused price to reverse. Okay? So,
14:11another example would probably be right
14:13here. Price went up, pulls back, and
14:15then goes up here, creating a swing low.
14:17Right, this time swing low, price came
14:19down, swept the sell-side liquidity, and
14:21then reversed and caused price to go up.
14:24And you must understand that liquidity
14:26sweeps,
14:27which is really just
14:30price taking out a previous high or low
14:32and trigger the resting orders and the
14:33stop losses there, and then cause price
14:35to reverse.
14:38It usually comes in the form of like a
14:40V-shape reaction, which means that price
14:42must move down very aggressively and
14:45then move back up very aggressively,
14:48forming what we call a V-shape reaction.
14:51Right, so in in this case, clearly there
14:52is a liquidity sweep because after price
14:55take out this low right here, right?
14:57Sweeping the liquidity below this low,
14:59what happened was that we got aggressive
15:01selling pressure to the downside, but it
15:03could not sustain itself. Right, because
15:05it's just smart money manipulating
15:08price, causing price to come down, sweep
15:09the liquidity. And then I think you see
15:11the next thing
15:12is that price started reverse very
15:14heavily and started moving to the
15:16upside, right? Because there's a lot of
15:17buying pressure, a lot of buying
15:19momentum, right? Creating a V-shaped
15:22reaction just like this.
15:25So, liquidity sweep tends to happen
15:27before price reverse, before price
15:29actually continue,
15:32before a deeper retracement. Okay, so
15:34just understand that just because this
15:36is a liquidity sweep does not
15:37automatically means that the market is
15:39going to reverse. Right, you can see in
15:41this case, just because price of the
15:42liquidity below these lows right here
15:45does not necessarily mean that the
15:46market is going to reverse from bearish
15:48to bullish right now.
15:50Price still have to take out your
15:51structural highs, right? So, in order
15:53for the market to shift bullish, it
15:55needs to take out this last lower high
15:56right here, giving us a market shift
15:59like what we covered.
16:01Okay, so yeah, let's try to spot some
16:03more liquidity right over here, very
16:05obvious one. Price came up here, pulls
16:07back, goes up, pulls back, and then goes
16:09up, pulls back. Once again, this is what
16:11retail traders would deem as your
16:13resistance level, right? Once again, the
16:16retail traders are going to be entering
16:17for a sell right here, placing their
16:18stop loss above those highs itself. But,
16:21little did they know those are actually
16:23just our sweet old available liquidity
16:25for smart money to sweep before price
16:27continue heading back down. Right, so
16:30you can see a lot of instances where
16:32smart money is just sweeping liquidity
16:34and then cause price to move in a
16:36particular direction. It happens every
16:37single minute, every single single
16:39second, every single hour, every single
16:42day, right? Because once again, that's
16:44just the fuel the market needs in order
16:46for it to move in a particular
16:49uh direction. Right, maybe I can give
16:51you guys two more examples.
16:54Right here,
16:56when price comes down,
16:58pulls back,
16:59comes down, pulls back, and then goes
17:01down, and then goes up again. In this
17:03case, this one is quite subtle, right?
17:05But, if you zoom in here, you can
17:06actually see
17:07what did price do? Price goes down up,
17:10pulls back, goes up,
17:12pulls back, and then sweep the liquidity
17:14below these lows, and then push to the
17:16upside. Right, so this is also a
17:18liquidity sweep right here.
17:21Okay, so there's a lot of liquidity
17:23sweep on the screen right here. I'm not
17:24going to identify every single one of
17:25them because that's going to cause this
17:27video to be like freaking 1 hour long. I
17:30just want to give you a few more
17:31examples just so that you can really see
17:34see it properly, right? See on the
17:35charts and learn how to identify and
17:37spot liquidity on the charts. So another
17:39one right here where price came up
17:40there, pulls back, goes up, swept the
17:42liquidity, and then comes down. Okay, so
17:44you can see another one right here.
17:47And then another one like right here as
17:48well.
17:50Where price came down creating a new
17:52lower high right here, came down, guess
17:53what? Above the swing highs there's
17:55liquidity. Price swept that and then you
17:57can see price created a sharp V-shape
17:59reaction causing price to move down
18:01significantly.
18:02And where did price gravitate towards
18:04next? It gravitated towards this low
18:07right here, this swing low that was
18:09formed right here to grab the sell-side
18:11liquidity. Right, so in this case, price
18:13went up there, swept the buy-side
18:15liquidity which is really just the
18:16orders sitting above the highs, and then
18:18came down here, swept the liquidity bit
18:21the sell-side liquidity that is below
18:23these lows right here, and then caused
18:24price to move up.
18:26Okay, so those are just some instances
18:28where there is very obvious liquidity
18:31and then price swept liquidity and then
18:33moved in a particular manner. So in this
18:36case, maybe I give you like one last
18:37example, right? You can see this trend
18:39line right here.
18:40Guess what? There is going to be
18:41liquidity sitting below these lows right
18:44here. Okay, so we can expect that to get
18:46swept before price actually move up or
18:49move down.
18:53So next, maybe I can just briefly talk
18:55about the concept of like a liquidity
18:57zone since we just covered liquidity.
19:00Remember we talked about supply and
19:01demand zones, we talked about order
19:02blocks, right? So those are our point of
19:05interest. Those are the zones in which
19:07smart money has entered for a large
19:09amount of buy or sell orders.
19:12If you combine that with liquidity,
19:15guess what?
19:16You have your liquidity zones. Okay, so
19:19liquidity zone is simply a point of
19:21interest that swept liquidity.
19:23It's simply a supply and demand zone
19:25that swept liquidity. It is simply an
19:27order block that has swept liquidity.
19:30So,
19:31in simple English, it's basically an
19:33area where price first takes an obvious
19:37high or low, triggers the resting orders
19:41right there, and then reacts from that
19:43point.
19:46Making the point of interest much more
19:48stronger.
19:49Okay, just further giving us more
19:51evidence that that is indeed a price
19:53point or a zone in which smart money is
19:55focusing on right now.
19:57For example, in this case, you got an
20:00imbalance right here, so we can identify
20:02this as the origin candle. So, this is
20:03the order block. But, is this just an
20:05ordinary order block? No. It is an order
20:08block
20:09that swept liquidity from these lows
20:12itself, that swept the sell-side
20:14liquidity. So, as a result, this is an
20:16order block plus liquidity, which is
20:19also our liquidity zone.
20:22So, an order block by itself is really
20:24quite strong, right? There's a chance
20:25for price to react from the order block
20:27itself. But, now you're telling me that
20:29this order block is not just an ordinary
20:31order block, but it also swept
20:32liquidity, which means that
20:35this is really indeed a price point, a
20:38zone in which institutions are paying
20:40attention to. So, as a result, when
20:42price returns to this area, we can
20:44expect a movement to the upside.
20:47And just as expected, look at what
20:49happened after this order block was
20:51formed. Price came up, pulls back, comes
20:55out, goes up, pulls back deeper, you
20:57know, once again sweeping some liquidity
20:58below these lows. And then when that
21:00happens, cause price to move up
21:01significantly.
21:04Okay, same thing right here. We got a
21:07supply zone, right? Because this is the
21:09origin point that led to price, you
21:11know, coming down here very
21:13significantly. And is this just any
21:15ordinary supply zone? No, it's a supply
21:18zone that swept liquidity. Okay, price
21:22came up there, swept those buy-side
21:23liquidity above those highs, and then
21:25caused price to reverse.
21:27So, supply zone plus liquidity forming
21:29our liquidity zone, which means that the
21:32next time price actually came up there,
21:33we can expect some form of
21:36sellers to be stepping into the market
21:38causing price to move down.
21:40And in this case, that's exactly what
21:42happened, right? Price went up to this
21:43area here. In fact, he actually broke
21:45past a little bit because maybe there's
21:47not enough sell orders within this area
21:49itself. So, as a result, it needs to
21:51sweep the liquidity above these swing
21:53highs right here,
21:55and then causes price to move to the
21:58downside.
22:00Okay, just to show you like an example
22:02in live market condition right here.
22:04What happened over here was that price
22:06came down
22:09over here,
22:10goes up, comes down, and then goes up.
22:13So, we know that there is available
22:15liquidity sitting below these lows right
22:17here.
22:19And then
22:20this is our good old liquidity sweep
22:23right there, right? Price then don't
22:25came down, swept the liquidity below
22:26those lows, and guess what? It also came
22:29down and mitigate this demand zone that
22:31we have right here, right? This demand
22:33zone that caused price to actually move
22:34to the upside. And is this just a demand
22:37zone? No, this is a demand zone that
22:39swept liquidity, right? Because if you
22:41look at the left-hand side right here,
22:42price went up, pulled back reacting from
22:44this supply zone, goes up,
22:47and then it comes down, swept the
22:48liquidity below these lows, and then
22:50move to the upside. Right? So, this is
22:52actually our liquidity sweep over here.
22:56Okay, so this is a demand zone that
22:59swept liquidity, and by the way, also
23:01caused price to break structure right
23:03here.
23:04And you can see, where did price pull
23:06back to? Price pull back to this demand
23:08zone, swept the liquidity uh below these
23:10lows, and then look at the price action
23:12that's going on right now in the live
23:14market condition.
23:16Price is moving up significantly because
23:18it has gotten all the fuel it need to
23:20actually move up very, very fast.
23:23Because of the liquidity, right? Because
23:26price swept liquidity, and also price
23:29has mitigated this demand zone that
23:31swept liquidity. So, you can just
23:33imagine the sheer amount of like buy
23:36orders that are just sitting at this
23:37price point right here.
23:38At this 1.17 area.
23:42Okay? So, that is your liquidity zone.
23:44It's just your supply and demand zone or
23:45your order block or any point of
23:46interest that swept liquidity.
23:49Now, let's move on to the next concept
23:52that I want to talk about today, which
23:53is called your inducements.
23:57Okay?
23:58Inducement is basically a move or a
24:01structure the market creates to tempt
24:03traders into entering too early, placing
24:07stops in obvious places, or believing
24:09the move is already confirmed.
24:12So, what that basically means is that
24:14inducement is the bait before the real
24:17move.
24:18Inducement is like,
24:20"Hey, dumbass retail trader, you should
24:22enter for a sell right here and place
24:23your stop loss right here because this
24:25pattern has just appeared into the
24:26market."
24:28It's the bait. It's the bait for you to
24:32actually generate liquidity for them.
24:36Okay? So, that's what inducements are.
24:38They are basically traps to entice
24:40retail traders to enter early so as to
24:43generate liquidity.
24:47Okay? So, let me just give you some
24:48examples on like what they would look
24:50like. Basically, how inducement works is
24:53that the market tends to create a very
24:55tempting structure, right? Just once
24:57again, enticing retail traders to enter
24:59early. So, in this case,
25:01guess what? There is double top right
25:03here. A lot of traders, they see a
25:05double top in a downtrend, they're going
25:07to be entering for a sell right here.
25:09And when they do, they're going to be
25:10placing their stop loss above those
25:12double top, just like what we have
25:13mentioned right here, above the equal
25:15highs, generating what we know as
25:18liquidity.
25:19And then later on, price went up there,
25:21swept the buy-side liquidity, and then
25:22reversed. So, in this case, the
25:25inducement was actually this double top
25:27right here.
25:28It was basically a pattern to induce or
25:31entice retail traders to enter for a
25:34sell position early and place their stop
25:36loss above those highs, generating
25:39liquidity for the smart money,
25:43thereby causing the real move to
25:45actually happen.
25:47Okay, so
25:49yeah.
25:50Market creates a tempting structural,
25:52retail traders react to it, you know, by
25:53entering too early, and then they place
25:56their stop loss, or they place their
25:57stop orders, and that creates liquidity.
26:00Price then uses that liquidity before
26:03moving in the intended direction.
26:07So, another example right here is when
26:09people see a double bottom just like
26:10this, right? Price comes down, mitigate
26:12a demand zone, and then double bottom,
26:14people are thinking that, "Okay, the
26:16pullback is over, right? Right now,
26:18price is going to go up right here."
26:20Little do they know that it's just
26:21liquidity, right? Little do they know
26:22price swept the liquidity, and then move
26:25up.
26:26Another thing that is worth noting is
26:28that inducements tend to happen when
26:30it's near a significant point of
26:33interest, near a order block, or near a
26:35supply and demand zone, or near a
26:37liquidity sweep zone.
26:38Okay? Because, once again, these are the
26:40zones in which smart money know retail
26:42traders are going to be paying attention
26:44to. So, they're more likely going to lay
26:46traps at those zones to entice retail
26:49traders to enter early
26:51before, you know, the real move actually
26:52happens.
26:54Another one right here.
26:56Okay, so this is the exact same example
26:58that we have right here, right? Double
27:00tops. But instead of
27:02retail traders entering for sales right
27:04here, another group of retail traders,
27:06they might see this and they may want to
27:07place their stop orders above those
27:09highs right here because they might want
27:11to trade the breakout, right? If price
27:12break out above those highs, they're
27:14going to be enter for a long position.
27:17Okay, so this will be stop orders, which
27:19is also another form of liquidity,
27:21right? So just like what we expected,
27:23right? Stop orders over here, price up
27:24the liquidity and then cause price to
27:26reverse. Same thing like what we have
27:28over here.
27:29And then also same thing as a strong
27:30high and a strong low, like just pretty
27:33much what we covered over here.
27:35Okay, so in this case, another example,
27:37price comes down, pulls back, goes down,
27:40pulls back, and then you can see this is
27:42price pulling back to this supply zone,
27:45right? Before continuing down. And the
27:47minute price get a reaction from this
27:48supply zone, a lot of retail traders,
27:50once again, they are looking for shorts.
27:52And then they're going to be placing
27:53their stop loss above those highs.
27:55Thinking that price is just going to go
27:57down and go down and they're going to
28:00hit TP straight away. But that did not
28:02happen because price haven't swept
28:05liquidity yet.
28:06So as a result, it don't price went up
28:07there, swept the liquidity and then
28:09moved to the downside.
28:11All of this could be avoided if you just
28:14understood the concept of liquidity. All
28:17of this could have been avoided if you
28:18could just acknowledge that that right
28:20there is an inducement.
28:24Okay, and all of this could be avoided
28:25if you just got a little bit of
28:27patience. Okay, just wait for liquidity
28:29to be swept, then you enter for the
28:31position itself.
28:35Another example right here where retail
28:36traders want to buy at a strong low when
28:39price mitigates this demand zone, you
28:40know, they buy right here, place their
28:42stop loss below those lows. Also,
28:44another group of retail traders, they're
28:45going to be placing their
28:47stop orders here as well, right? Because
28:49they might want to sell the breakout to
28:50the downside.
28:52All of these stop loss uh stop orders
28:54contributing to the liquidity that smart
28:56money need to cause price to move to the
28:58upside.
29:00So, that's the concept of inducement.
29:02So, liquidity is basically where orders
29:05are resting. Inducement is what the
29:08market creates to encourage traders to
29:11place those orders there.
29:14Inducement is basically the bait
29:18that generates liquidity.
29:20Okay, so liquidity is the target.
29:23Inducement is the bait.
29:27Okay, so they kind of like come hand in
29:30hand together. You need the retail
29:32traders to be induced to enter into a
29:35long or short position early to generate
29:37liquidity.
29:39So, yeah, these two concepts are like
29:40intertwined.
29:42So, with that being said, maybe let me
29:44just show you guys some examples on the
29:46charts itself. Like, let's look back at
29:48this recent example that we have over
29:49here.
29:50Okay, like the one that I literally just
29:52shared with you guys. Let's try to
29:54identify where the inducements are at.
29:57So, in this case,
29:59let's say price was like somewhere
30:01around here. Okay, price was somewhere
30:02around here.
30:03And this is where, you know, we have
30:05identified a price in an uptrend. You
30:07got a bullish break of structure to the
30:09upside. And then this allows us to draw
30:12a demand zone over here. Okay, so we
30:14know that there's a demand zone right
30:15here.
30:16If you know how to draw a demand zone,
30:18chances are other retail traders also
30:19know how to draw a demand zone. It's not
30:21that difficult, right? So, as a result,
30:23what will happen next is that retail
30:25traders are going to be looking for a
30:27buy position at this demand zone right
30:29here.
30:30Okay?
30:31So, some people might want to draw their
30:33demand zone at this pivot candle. Some
30:36people might draw the entire range just
30:37like this. Okay, but retail traders know
30:39that when price reach this area, they're
30:41going to be entering for a buy position.
30:44So, as a result, you know, they just
30:45wait. Okay, they wait for price to comes
30:47up comes down to this demand zone. And
30:50when price comes down to this demand
30:52zone, this is where they're entering for
30:54the long position itself.
30:56In this case, this is not really a good
30:57example, right? Because after price
30:59mitigate the demand zone, it just goes
31:01up because this is actually a demand
31:03zone that swept liquidity.
31:05But let's say price did not go up
31:08straight away. Okay? Let's say this is
31:10the demand zone.
31:12And then price started pulling back to
31:13this demand zone. Comes up, pulls back,
31:16goes up, pulls back creating a lower
31:17highs, lower lows, shifted bearish in a
31:19short term just to facilitate the
31:22pullback. And then later on price comes
31:24down and touch this demand zone.
31:26So, the minute touch this demand zone
31:28right here, a lot of video traders will
31:30be entice, induce to enter for a long
31:33position early. So, as a result, they
31:35bought enter for a buy position right
31:37here. Okay, they enter for a buy
31:38position right here thinking that this
31:40move is going to happen. Okay, no
31:42liquidity has been swept whatsoever yet,
31:44right?
31:45But they are in the fantasy land
31:47thinking that price is just going to
31:48magically go up because he has came down
31:51to this awesome beautiful demand zone
31:53that they've mapped out.
31:55But that is really not the case, right?
31:57As a result, what happens next is that
31:58instead of going up,
32:00these retail traders, you know, they
32:02enter for a long position right here.
32:03They place a stop loss below those lows
32:05itself.
32:06A few minutes later, an hour later,
32:08price came down, swept the low right
32:10here, swept the
32:13the all the stop orders and also all the
32:14stop losses, you know, trigger all the
32:16stop losses. Now, the retail trader is
32:17mad that they got stopped out.
32:19"Oh my god, why did I just get stopped
32:21out?" And then next thing you know,
32:22price go up in that direction.
32:25Well, my retail trader, it's because you
32:27don't understand inducement.
32:29If you did understand inducement and
32:31liquidity, then you would know that
32:33price cannot move up
32:35without a liquidity sweep.
32:37So, you entering for a buy position
32:39right here is way too early.
32:41You are doing exactly what the smart
32:43money has planned for you to do. And
32:45that is to enter early.
32:48So, if you search up the the definition
32:50of inducement in dictionary, you will
32:52see that induce basically means entice,
32:55right? It's to incentivize, right? It's
32:57to seduce you to enter early. And that's
33:00what happened in this case, right? Smart
33:02money has seduced you thinking that this
33:04move is going to happen. So, you enter
33:05for a buy position right here. Or if you
33:08are a little bit adventurous, you might
33:10want to trade the breakout, right? So,
33:12the retail trader might want to place
33:14stop orders below those lows itself,
33:16right? So, that when price comes down,
33:18take out this low, they enter for a sell
33:20position.
33:22That's sell stop orders. All of these
33:24stop losses, all of these stop orders
33:26just add on to the available liquidity
33:28that is sitting below these lows.
33:30And later on, smart money take advantage
33:32of all that pseudo liquidity and cause
33:34price to reverse and head back up.
33:37Okay? So, in this instance,
33:40that was not what happened, right? But I
33:42wanted to like show you an example.
33:44And now you might be wondering, what
33:45happened right here then?
33:47Okay? What happened right here that
33:48caused price to actually move up?
33:49Because there was no liquidity sweep
33:51happening over here. Price just gap all
33:53the way down because it was a Sunday,
33:55right? Because the market were closed on
33:57the weekends. And then when the market
33:59opened, prices went up straight away.
34:01Well, do you think this move could
34:02happen without a liquidity sweep?
34:04No. It needs a liquidity sweep. And that
34:07begs the question, where is the
34:08liquidity sweep then? Because it did not
34:10happen when price is pulling back.
34:12Well, this is where you look at the move
34:13that happened on the left hand side
34:14right here.
34:15When price goes up,
34:17pulls back, and then goes up,
34:20what happens? Higher low. Retail traders
34:22want to trade a continuation. They enter
34:24for a long position right here. They
34:26place their stop loss below those lows.
34:29Also, the people who want to trade the
34:31breakout, they are placing their sell
34:32stop orders below those lows as well.
34:35Guess what? Generating liquidity. Okay,
34:38so below those lows right here, there is
34:40obvious liquidity.
34:42And just as expected, price came down,
34:46swept all the liquidity right here
34:48before moving to the upside.
34:50Just imagine the anguish. Imagine the
34:53disappointment of the retail traders,
34:55you know, who actually enter for a long
34:57position right here, happily thinking
34:59that price is going to go up, you know,
35:00and hit their TP. So, they continue
35:02holding the trade over here, over the
35:04weekend even. Right? And then today when
35:06the market opens, boom, their stop loss
35:09got triggered and then price actually
35:10started going up. Just imagine how sad
35:13they feel right now because they don't
35:15understand liquidity.
35:17I know I sound like a evil MF right now,
35:21right? But that's just how the market
35:22works.
35:23You can
35:24either
35:25blame the player or like no, don't hit
35:28the player, right? Hit hit the game.
35:30Okay? So, like
35:31you can either like blame and you know,
35:34hit on the rules of the game or you can
35:35just learn the rules of the game and
35:37learn how to take advantage of it.
35:39Right? And that's what really liquidity
35:41is for me.
35:42It just allows me to like see the market
35:44from a different lens so that I can stop
35:45operating like a retail trader and start
35:47to operating like someone who actually
35:49knows his
35:52Okay, so let me just give you guys like
35:54another example maybe in like a bearish
35:56scenario right here if I can even find
35:59one.
36:00Let's try to look at this one.
36:05Is this a good example? No, this is not
36:07a good example.
36:10How about this one right here? There we
36:12go.
36:13Okay, there we go. This is a pretty good
36:14example. So, over here, price came down,
36:17pulls back and then goes down
36:19causing all bearish break of structure
36:22to the downside.
36:25Which means the market is bearish right
36:27now, right? ideally, when we look at
36:28this price action right here, we are
36:30assuming that the market is going to
36:32continue bearish and we're going to be
36:33looking for shorts.
36:35So, this is where you can identify, you
36:37know, your swing high, which is the
36:38highest point that led to the break of
36:39structure, and your swing low. And this
36:42is the range that we are trading within.
36:43Okay, so once again, I'm just applying
36:45whatever that we have learned so far,
36:46right? So, I'm not doing anything crazy
36:48right here. This is just me mapping out
36:50the structure, the swing highs, the
36:52swing low, the swing range in which we
36:54want to focus on.
36:55And then the next step is you might use
36:57your premium and discount, right? And
36:59you realize that, okay, price is still
37:00quite down here in the discount pricing,
37:03and I want to see price pull back to the
37:04premium pricing.
37:05Or you can even, you know, map out your
37:07supply zones, right? Because this is
37:09where you want to look for shorts. Okay,
37:11there's a supply zone right here.
37:15And then there's also a supply zone
37:17right here, as well.
37:19Okay, there's two supply zones over
37:21here.
37:22How do we know those are the supply
37:23zone? Because you can see price move to
37:25the downside,
37:27pulls back, moves to the downside again,
37:29and in this case, this entire
37:30consolidation caused price move to the
37:32downside. If you want it to be even more
37:34precise, obviously, you can map out this
37:36supply zone that we have right here,
37:38right? Like this range right here that
37:40led to this imbalance to the move to the
37:41downside.
37:43Okay, so yeah, those are the supply
37:44zone. And once again, if you draw your
37:46premium and discount, you'll be wise
37:48enough to know that you shouldn't be
37:49looking for a sell at this supply zone
37:51right here, because it is still within
37:53the discount range.
37:56Okay, so
37:59let me just try to identify liquidity
38:02using the concept that you guys have
38:04literally just learned right here.
38:05Remember, above a swing high and below a
38:08swing low, there's our liquidity. So, in
38:10a downtrend, when we are looking for
38:12shorts, ideally, we want to see price
38:14sweep the
38:15buy-side liquidity,
38:18and that's the fuel we need for price to
38:20move to the downside.
38:21Okay, so that's all I'm caring right
38:23now. If I'm looking for a short
38:25position, I just want to see price sweep
38:27the liquidity above the swing highs.
38:29Which means if price comes down, sweep
38:31the liquidity below the swing lows, I
38:32don't care because this could just be
38:34the fuel that price need to pull back.
38:36That's it. But if I'm looking for
38:38shorts, I need to see price sweep some
38:40form of liquidity above the swing highs.
38:42Same thing. If I'm looking for longs,
38:45right? Like let's say I want to enter
38:46for a buy position like somewhere around
38:47here, I want to see price sweep the
38:49liquidity below the swing lows. Then I
38:52will start looking for longs. Okay, once
38:54again, that's the fuel that I need in
38:56order for uh price to move to the TP
38:59very, very fast like how I like it.
39:00Okay?
39:01So in this case, where's the available
39:03liquidity?
39:04That should be the first question you
39:05ask yourself. Where is the available
39:08liquidity? Well, price came down, pulls
39:10back, goes down, pulls back, goes down,
39:13pulls back, and then goes down. Guess
39:15what? That is your resistance level
39:18right here. And there's multiple swing
39:20highs being formed right here, which
39:22means that there is
39:23liquidity above those highs here.
39:25So once again, this is another mistake
39:27that retail traders tend to make. They
39:29see price comes up to this supply zone,
39:31and they immediately enter for a sell
39:33the minute price mitigate the supply
39:35zone, right? They enter for a sell
39:36somewhere around here. And then they
39:37place a stop loss above the supply zone.
39:40Once again, just contributing to the
39:42good old liquidity.
39:45Okay, like when you have enter for a
39:46sell right here, they're just fuel for
39:48me. That's it.
39:50So in this case,
39:51because now we understand liquidity,
39:53we're not going to be entering for a
39:53sell right here.
39:55We acknowledge that okay, swing highs
39:57are formed right there. There is
39:59available liquidity being built up right
40:01there, and I'm not going to enter for a
40:03sell until those get swept.
40:05Okay, cool. Next, where is
40:07more liquidity? All right, let me try to
40:08find more liquidity.
40:10Well, in this case, there's a price goes
40:12up, pulls back, goes up, pulls back,
40:15right? So in this case, there is
40:17liquidity sitting
40:18above those highs here as well.
40:21In fact, when price went up here and
40:24pushed back, goes up, pushed back
40:26creating your
40:27equal highs, there was additional
40:30buy-side liquidity building up above
40:32those highs itself.
40:34Okay, so let's map that up.
40:36Okay, equal highs, liquidity being built
40:37up right here. And then later on, price
40:40went up there, swept the liquidity above
40:42those highs and then pushed to the
40:44downside causing price to break
40:46structure.
40:47Clear as day, this is institutional
40:50price action. Clear as day, this is
40:52intent from the smart money. Okay, like
40:55this is the footprint of the smart
40:56money. All you got to do is to open your
40:58eyes and look.
41:00All you got to do is to stop being
41:01blind, start waking the hell up, and
41:04just look and observe.
41:06So, we know that supply zone has been
41:07formed right here. But, is this ordinary
41:09supply zone? No. It's a supply zone that
41:12swept liquidity.
41:14So, this is a supply zone that swept
41:17liquidity, which is a liquidity zone.
41:20So, in terms of like probabilities-wise,
41:22which zone do you think has a higher
41:25probability? Right, like do you think
41:27price is going to respect this zone or
41:29this zone?
41:31Now, let's let's do a quick recap. Okay,
41:33so drop premium discount.
41:36Right here.
41:38Okay, so now we got zone one and zone
41:41two.
41:42So, in this case, zone one, what does
41:44zone one has? Zone one right here
41:47is within a premium range, okay? Within
41:49the premium range.
41:51And then it also
41:52swept liquidity, right? Price went up
41:54there, swept liquidity
41:56above those equal lows. Okay?
41:59And then it's also like uh let me just
42:02see, supply zone, right? Supply zone
42:04within premium pricing, swept liquidity.
42:08And also I before I forgot to mention,
42:10but let do break of structure right
42:12here.
42:13So, that's zone one.
42:15Now, let's take a look at zone two. What
42:16does zone two have?
42:17Zone two is a supply zone within
42:20discount pricing, right? So, that itself
42:22is not a confluence.
42:24And then,
42:26it also have available liquidity sitting
42:29above those highs itself.
42:32Further on, just adding to the fact that
42:34this zone is not reliable.
42:36And it is also
42:38Yeah, like I said, within the the
42:39discount pricing itself.
42:42Okay, so, just by implementing whatever
42:45that we have learned so far, we have
42:46learned that in terms of probabilities,
42:50zone one has a higher chance of working
42:53out compared to zone two.
42:55Which means that there's a higher
42:56chance, once again, not certainly,
42:58right? There's a higher chance for price
43:00to respect zone one and hit back down
43:02compared to respecting zone two and hit
43:04back down.
43:06It's just math, okay? It's just math.
43:08Because zone one has much more
43:10confluences. Zone one has much more
43:12things like just backing it up.
43:14Okay, so, in this case,
43:16let's continue to observe what price
43:17does. Price went up there, mitigate zone
43:20one, and look at the price action right
43:22here.
43:22And then started collapsing heavily. But
43:25before it collapsed heavily, what
43:26happened? Okay? Once again, I want you
43:28guys to understand the logic of price.
43:30If you don't understand the logic of
43:32price, there's no use trying to memorize
43:34all of these patterns, all right? You
43:35must understand why price move the way
43:37it does.
43:38So, in this case,
43:41let's get rid of this. Let's get rid of
43:42this right here. So, the first thing
43:43that happened over here
43:45was that price went up there, swept the
43:46liquidity above those highs here.
43:48And when it does,
43:50price used those liquidity
43:52to, you know, make a tiny little
43:53pullback, all right? There was not
43:55enough fuel. This was the sign that
43:57tells us that there was not enough fuel.
43:58Because if this liquidity is enough,
44:00what will happen is that price will just
44:01come up there, sweep the liquidity
44:03creating a sharp V-shape reaction, and
44:05price will just go down there and take
44:06out this low right here. But, that did
44:08not happen.
44:09So, even though smart money swept
44:10liquidity right here, there was still
44:12not enough fuel. And if there's not
44:14enough fuel, then price need to grab
44:15more fuel. And where is it going to grab
44:17more fuel? This zone right here. So, it
44:20went up there, tapped into the zone. And
44:21you can see, the minute it taps into
44:22this supply zone that swept liquidity,
44:25right now, at this point in time, we're
44:28expecting price to move down.
44:31If there is enough fuel at this supply
44:33zone.
44:34If there is not enough fuel at this
44:36supply zone, where is the next area
44:38where price is going to be grabbing the
44:39few fuel?
44:41Above these highs right here. Because,
44:43remember, we got liquidity sitting above
44:46these highs here.
44:47Okay? So, yes, there is a lot amount of
44:49sell orders at this price point.
44:52But, if there's not enough fuel, not
44:54enough sell orders, then price is just
44:56going to continue going up, sweep the
44:58liquidity,
44:59sweep the trigger all the stop losses,
45:01all the stop orders, and then go down.
45:04So, in this case, let's just observe.
45:06Okay, price goes up, sweep the liquidity
45:09because, once again, there's not enough
45:10fuel right here at this supply zone,
45:12and came up here, swept this high right
45:15here,
45:17and then started pushing to the
45:19downside. You can see, the minute price
45:21swept the liquidity above those highs,
45:23it dumped aggressively. You can see the
45:25huge amount of imbalance that was formed
45:26right here.
45:28Right, a huge amount of imbalance. And
45:30then, let's continue to see what price
45:31does.
45:32And before we move on,
45:34observe. Okay? Pay attention. Listen to
45:37what the market is trying to tell you.
45:39In this case, price moved down
45:40aggressively. Huge amount of
45:43selling pressure, huge amount of selling
45:45momentum. This is also known as our
45:48displacement. This is also known as our
45:50imbalance.
45:52So, once again, you can start to see the
45:53different pieces of the puzzle start
45:54coming together. The imbalance was
45:57formed by the liquidity sweep.
45:58The liquidity sweep was created by the
46:01inducement.
46:03Okay? So, if you zoom in a little bit
46:04right here at this price action over
46:06here,
46:07when this big bearish candlestick was
46:09formed,
46:10guess what?
46:11There was a gap, right? There was an
46:13imbalance.
46:14We can mark that gap by identifying the
46:17low of the previous candlestick and the
46:18high of the next candlestick, giving us
46:20our fair value gap.
46:23Fair value gap.
46:26Wow.
46:27And look at where price reacted from.
46:29Prices go up, okay?
46:32Comes down.
46:34Comes down a little bit, reacted from
46:37the fair value gap, and then started
46:39pushing to the downside.
46:41And before it actually pushed to the
46:43downside,
46:44what happened?
46:46Remember, the market needs to sweep some
46:48liquidity before it move, always.
46:50Every single time, it needs to sweep
46:52liquidity.
46:53It needs to get fuel.
46:55So, if you go down to the 5-minute time
46:56frame, observe what we have right here.
46:58Price came down, pulls back,
47:01and then comes down, giving us our lower
47:04high, giving us a swing high. And with a
47:07swing high just like this, we know that
47:09there is buy-side liquidity.
47:12And that is exactly what price did.
47:14Price went up there, swept the buy-side
47:16liquidity above these highs,
47:19also mitigating the fair value gap,
47:22right? Filling up the remaining amount
47:24of like sell orders within this price
47:26point, the imbalance,
47:28before it started moving down
47:30aggressively.
47:33Nothing that ever happens in the market
47:35is random.
47:36Nothing happens by mere coincidence in
47:38the market. Every single move has a
47:41purpose. And when you understand market
47:43mechanics, you start to read each move,
47:46and you start to trade the market with
47:47clarity and confidence.
47:50This is how I am able to like just
47:52predict where the market move. This is
47:54how I can and with so much certainty
47:56like where price is moving towards next
47:58and the next few minutes and the next
47:59few hours.
48:01I'm not special. I'm not super smart.
48:03I'm not super intelligent. I don't have
48:04a PhD. I don't have a Harvard degree.
48:07I'm not some guy working on Wall Street.
48:10I'm just a guy who have learned how to
48:12read the market and we have learned the
48:14heartbeat of the market and just flow
48:16with it.
48:17Right? That's the beauty of market
48:18mechanics.
48:20Okay, so in this case, price up the
48:22liquidity and has to push it on the
48:24downside.
48:25Okay? So, yeah, there we have it. Right?
48:29You can see the price continue going
48:30down and you can see
48:32once you start like really understanding
48:34these principles and this way of viewing
48:36the market, everything starts becoming
48:39really obvious. Right? Just like Neo in
48:41the Matrix.
48:43You've taken the red pill. Okay, once
48:45you see it, you can't unsee it.
48:47Now you're like, okay, why did price
48:49move down so aggressively right here?
48:51Well, because price actually swept some
48:52liquidity above those highs right there
48:54and you also medicate this supply zone.
48:57Wow, everything is starting to add up.
48:59And like I said, once you see it, you
49:01cannot unsee it.
49:02That's the blessing of market mechanics.
49:05Once you infuse it into your
49:06bloodstream,
49:09now you can see.
49:10I was blind, but now I see. I was awake.
49:14I was sleeping, but now I'm awake.
49:18So, that my friend is the power of
49:20liquidity and inducements and all this
49:22stuff. What I'm doing over the next 30
49:24days is I'm giving you a new lens in
49:26which you can view the market from
49:28because like I mentioned in the first
49:29few lessons that what got you here will
49:32not get you to where you want to go.
49:34You need to change the way you see the
49:36market because when you change the way
49:38you see the market,
49:40you start to change
49:42the reality. You start to change your
49:44P&L. You start to change your results.
49:49So,
49:50market mechanics concepts, all of this
49:52stuff is essentially just like pieces of
49:54the puzzle. Like I said, every single
49:57episode of this mentorship series I'm
49:59giving you access to one piece of the
50:01puzzle.
50:02But,
50:04it's just a piece alone. A piece alone
50:06will not change your trading overnight.
50:08It will not make you magically
50:10profitable overnight. You need to piece
50:13the different puzzles together. You need
50:15to take the liquidity concepts, the
50:17market structure, the supply and demand
50:19zones,
50:20right? The Q zones, the fair value gaps,
50:22the order blocks,
50:24the systems, the processes, and put
50:26everything together into a trading plan
50:28for you to like just
50:30become a monster on the charts.
50:36So, to keep it simple, liquidity is
50:38where orders are resting in the market.
50:41Price is often drawn to those areas
50:43because liquidity act as fuel. It act as
50:46lubrication, right? For price to
50:49actually move.
50:50An inducement is the bait the market
50:53creates to pull traders into early and
50:55build more liquidity.
50:57So, it's like if this is the liquidity
50:59sweep,
51:01then this is the available liquidity,
51:04then this is the bait, then this is the
51:06inducement. So, inducement
51:09build up available liquidity, sweep
51:11liquidity, the market move.
51:13Okay, that's the pattern. That's the
51:15pattern that I want you to remember.
51:16Smart money layout inducement,
51:19build up available liquidity above the
51:21or below the inducements,
51:23and then price the long sweep the
51:24liquidity and then move.
51:27Okay?
51:29This is just the motion of the market.
51:32This is the heartbeat of the market
51:33itself.
51:35And when you understand the difference
51:36between the baits and the target, the
51:39market starts making a whole lot more
51:40sense.
51:43At the end of the day, you must
51:44understand that trading is simply a
51:46pattern recognition game.
51:48The more charts you study,
51:51the more you start to recognize where
51:52liquidity is sitting.
51:55Where inducement is being created.
51:57And where price is most likely trying to
52:00move next.
52:03So, keep training your eyes to spot
52:05liquidity.
52:07Okay, keep on practicing. Keep on
52:10analyzing. Keep on reviewing.
52:13Keep on putting in the reps.
52:16The more liquidity you spot, the better
52:18you get at spotting liquidity. The
52:20easier it is for you to spot liquidity
52:22in real market conditions.
52:25So, that you're not trapped taking the
52:26wrong move of the market itself.
52:29I hope this episode was an eye-opening
52:30for you. Right? Because it was sure as
52:32hell super duper eye-opening for me when
52:34I first learned about liquidity and
52:35inducements.
52:36I really believe that like this right
52:39here will really change the way you
52:40trade forever.
52:42Okay, this was like the missing piece of
52:43the puzzle for a longest time I could
52:45not figure out why I keep on getting
52:46stopped out.
52:48Right? Why I keep on blowing account?
52:49Why I keep on, you know,
52:52losing money no matter how hard I try.
52:54It's all because I was just viewing the
52:56market from the wrong lens. I was trying
52:59to see the market
53:01using
53:03my own perception, my limited belief
53:06about the market, the programming.
53:09Right? And as a result, I just couldn't
53:11see price.
53:12I was blind.
53:15But once I started learning about
53:16liquidity, mastering liquidity, I see
53:20the market. I see it for what it is.
53:22I see it for the beautiful masterpiece
53:24it is.
53:26So, yeah. I hope this was really like
53:27awakening for you. Right? Because this
53:29was really awakening for me. And I
53:31really wanted to like take more time
53:33just to pass down this knowledge right
53:35here because this is so important.
53:37Over the next few lessons we're going to
53:38talk about more important stuff. And
53:40we're going to talk about how to piece
53:41everything together. For now, keep
53:43grinding, keep showing up, and you win
53:46in the end.
53:48And as always, remember you're just one
53:50trade away.

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