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Tier 4Lesson 15 of 20

Liquidity Sweeps

Stop hunts, raids and failed breakouts

11 min+80 XP Sweep or Breakout?

A liquidity sweep is a run on stops: price pushes through an obvious high or low just far enough to trigger the orders resting there, then reverses. It is one of the most repeatable footprints of large participants — and one of the most misread.

01Anatomy of a sweep

100.0105.0110.0Equal lows (SSL)SweepDisplacement
IllustrativeTwo equal lows near 100.1. Candle 22 wicks to 99.2 — triggering every sell stop — but closes back at 100.7. The next candle displaces higher: the raid is over.
  1. 1The pool: an obvious level with stops beyond it.
  2. 2The raid: a wick through the level that triggers those stops.
  3. 3The rejection: the candle closes back inside the prior range.
  4. 4The displacement: a strong move away from the sweep, ideally breaking short-term structure.

02Sweep or breakout?

Sweep (fade it)
  • Wick through, close back inside
  • No follow-through beyond the level
  • Displacement the other way
  • Often during a killzone open
Breakout (respect it)
  • Full-bodied close beyond the level
  • Follow-through candles
  • Retest holds from the other side
  • Higher-timeframe structure agrees
100.0105.0110.0Resistance
IllustrativeBy contrast, this break closes well above resistance, follows through, and the retest holds. Fading it would be fighting real demand.

03Trading the sweep

Stop placement
beyond the sweep wick (+ a small buffer)
If price returns beyond the raid extreme, the idea is wrong.

Aggressive traders enter on the close of the rejection candle. Conservative traders wait for a market structure shift on a lower timeframe and enter on the retracement into the fair value gap it leaves. Targets: the opposite liquidity pool or a fixed R multiple.

Watch outTest before you trust

Our Backtester includes a Liquidity Sweep Reversal template. Run it on several markets: mechanically fading every sweep is not profitable everywhere. The edge comes from context — sweeps at higher-timeframe levels, in killzones, in the direction of the daily bias.

Key takeaways
  • A sweep = wick through a pool + close back inside + displacement away.
  • Breakouts close beyond, follow through and hold the retest.
  • Stops go beyond the sweep wick.
  • Context (HTF level, killzone, bias) separates good sweeps from bad ones.
Common mistakes
  • Fading every new high as a “sweep”
  • Entering before the candle closes back inside
  • Placing the stop inside the sweep wick

Complete “Liquidity Pools (BSL & SSL)” to unlock this challenge.

Go to Liquidity Pools (BSL & SSL)