In ICT (Inner Circle Trader), liquidity refers to areas on the chart where many buy and sell orders—especially stop-loss orders—are likely to be concentrated.
ICT traders generally look for liquidity around obvious highs and lows, because these areas can attract price movement.
Main Types of Liquidity
Buy-Side Liquidity (BSL): Usually found above previous highs or equal highs.
Sell-Side Liquidity (SSL): Usually found below previous lows or equal lows.
Equal Highs: Can represent an area of buy-side liquidity.
Equal Lows: Can represent an area of sell-side liquidity.
Liquidity Sweep: When price moves through a high or low, potentially triggering orders, before moving in another direction.
Simple Example
Imagine EUR/USD forms two similar highs. Many traders may place stop-losses above those highs. An ICT trader may identify that area as buy-side liquidity and watch how price behaves if it reaches that level.
In simple words:
Liquidity = areas where a large amount of trading orders may be waiting.
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