Liquidity Sweep
A sharp move beyond an obvious level that triggers clustered stops before reversing.
Also called: stop hunt · stop run · liquidity grab
Written by Javier Sánchez Ros
In plain language
Stops cluster just beyond obvious highs and lows. Those resting orders are, collectively, a pool of liquidity — guaranteed counterparties at a known price.
A sweep pushes into that pool, triggers the stops, uses the resulting flow to fill large orders, and then reverses. The break looks decisive and lasts minutes.
It rarely requires a conspiracy. It is a structural consequence of everyone placing stops in the same predictable place.
Worked through
A wick to $49.88 and a close back at $50.60
- Obvious support
- $50.00
- Where most stops sit
- just below $50.00
- Low of the move
- $49.88
- Close
- $50.60
Twelve cents below the round number, then straight back up. Everyone who placed a stop at $49.95 was sold out at the low of the day, and the level they were trading held perfectly well.
This is not a conspiracy, it is plumbing. A cluster of stops below an obvious level is a cluster of resting sell orders, and anyone wanting to buy size needs sellers. Price reaching down to where the orders are is the market finding the liquidity it needs, and it happens because the stops are predictable.
The defence is to stop being predictable. Put the stop beyond the level with a buffer sized by the instrument’s volatility — a fraction of an ATR, not a round number — so that reaching it requires a genuine move rather than a twelve-cent probe.
The buffer is not free: a wider stop means a smaller position for the same risk. That is the trade being made — slightly less size, in exchange for not donating the trade to a wick that proved nothing.
Why it matters
Understanding sweeps changes where you put stops: beyond the obvious level with a volatility-based buffer rather than exactly at the round number everyone else uses.
Common mistakes
- Placing stops a few cents beyond the most obvious high or low on the chart.
- Treating every sweep as a reversal signal without waiting for price to reclaim the level.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A move beyond a key level that quickly reverses back inside the prior range.
A predefined exit that closes a losing trade before the loss becomes serious.
How easily an asset can be bought or sold without moving its price.
A trough with higher lows on both sides — a local turning point where buyers took control.
A price area where buying has repeatedly been strong enough to stop a decline.