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What Is Liquidity Pool in ICT

In ICT trading, a liquidity pool is a chart area where many stop-loss orders accumulate, typically around previous highs or lows, allowing institutional traders to capture liquidity and influence price movements. These pools consist of buy-side and sell-side liquidity, serving as targets for traders to trigger stop-loss orders and create market direction. Traders identify these pools by looking for historical price reversals, using them as potential entry or exit points in their trading strategies.

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Amos Iguma
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463 views2 pages

What Is Liquidity Pool in ICT

In ICT trading, a liquidity pool is a chart area where many stop-loss orders accumulate, typically around previous highs or lows, allowing institutional traders to capture liquidity and influence price movements. These pools consist of buy-side and sell-side liquidity, serving as targets for traders to trigger stop-loss orders and create market direction. Traders identify these pools by looking for historical price reversals, using them as potential entry or exit points in their trading strategies.

Uploaded by

Amos Iguma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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What Is LIquIdIty PooL In ICt?

In ICT trading, a liquidity pool refers to a key area on a chart where


numerous stop-loss orders (buy or sell) tend to accumulate, often
around previous highs or lows. It represents a zone where institutional
traders can strategically take positions to capture liquidity and
influence price movements.
Here's a more detailed explanation:
• Liquidity:
In trading, liquidity refers to the ease with which an asset can be
bought or sold without significantly affecting its price.
• ICT Liquidity Pool:
In the context of ICT, a liquidity pool is a specific type of liquidity that is
accumulated at certain price levels, particularly around prior highs and
lows.
• Purpose of Liquidity Pools:
These pools serve as potential targets for institutional traders to take
positions. They can use these pools to trigger stop-loss orders,
creating a directional movement in the market.
• Buy-Side and Sell-Side Liquidity:
Within the concept of ICT, there are two main types of liquidity pools:
buy-side liquidity (where stop-loss orders are placed below a low) and
sell-side liquidity (where they are placed above a high).
• Identifying Liquidity Pools:
ICT traders look for areas on a chart where there is a history of price
reversals, or where the price has previously stopped at a certain level,
as these can be areas where liquidity pools may have accumulated.
• Trading Liquidity Pools:
ICT traders use these pools as potential entry or exit points for trades,
understanding that the market may be moving toward these areas to
take out liquidity.

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