(Your guide to understand how prices move behind the scenes!)
In the trading world, there is something very important you need to learn from the start, which is:
🔎 Not every big candle or strong movement means there is 'true liquidity'!
There are two types of liquidity you need to understand well to avoid falling into the market trap:
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🟥 First: Fake Liquidity
🔸 These are movements made by whales and large institutions to attract small traders to the wrong direction.
🔸 The goal is to deceive you into entering a false trade while they sell to you or buy from you.
✅ Signs:
• Huge candles appear suddenly without a clear reason.
• The price breaks a strong support or resistance but quickly returns.
• This often happens after strong news or during low liquidity times.
❗ A simple example:
Did you see the price break resistance? You got excited and entered a buy?
And suddenly you found the price dropping quickly and your stop loss got triggered?
🚨 Congratulations... You fell into fake liquidity!
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🟩 Second: True Liquidity
🔸 This is the place where large institutions enter their real trades.
🔸 The price tends to stay at these areas for a relatively long time, showing clear accumulation.
✅ Signs:
• The price movement is slow and repetitive (going back and forth in the same area).
• Trading volume appears to increase but is distributed, not sudden.
• After leaving the area, the price moves strongly and steadily without hesitation.
❗ Example:
A support area that the price touched multiple times... and suddenly broke out strongly and continued?
🔥 This was an area of true liquidity.
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🧠 How to differentiate between them as a beginner?
Try doing the following:
1. Open the currency chart on the hourly or four-hour timeframe.
2. Monitor the areas where the price has stopped multiple times without breaking.
3. Check if the movement afterwards was strong and stable? Or false and temporary?
4. Monitor trading volume: If it suddenly spikes and is large = it might be a trap. If it’s distributed quietly = it could be true liquidity.
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📌 Tip for Professionals:
You can use indicators like OBV or Volume Profile to see where liquidity is actually gathering.
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🚀 The big secret?
Professionals don’t enter the big candle; they enter before it from areas of true liquidity.
And you can be like them if you understand the right difference!
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Share with me in the comments:
Have you ever fallen into the trap of false liquidity? 😅
📌 The suggested currency for follow-up today: $WCT 🪙🔥
