Hi Zest
I am just a laymen too so please don't confuse me with a expert. I have just spend 12 years trading the Forex market and after a period of 5 years, finally cracked it. I spend way too much time on trading forums talking about the art of trading, talking to many traders from many different country's. In doing this, I use terms that may not reflect the correct meaning in Forex trading. It starts by one trader calling a condition in a market a name and the rest just follow on. A big example is Supply & Demand. Some traders including me just call Supply a zone where the market has come from and Demand is where it is going. Traders like Cooder call it the other way.
What I call Liquidity zones is not actually correct and it is just a bad habit caused by a US trader a few years back. Luckily I am not a trading coach or I would be disbarred.
What I see or look for is large pools of orders that were missed when the price moves too quickly. They become a pool or dead weight on a chart and act like a magnet pulling the market backwards to pick up this supply. To me it is like a heavy ball being placed on a trampoline at one end and throwing a marble in the middle of the mat. The marble (price) will often just roll back to the weight ( opened orders ) because there is not much orders around to close. This create speed in the market attracting other traders to jump on the bus creating even more momentum towards the weight of the market.
Here is an example directly from my KINGS BOX strategy.
I posted this 16 months ago.
When I am talking about Liquidity Zones, I mean there is a VOID of orders in this area so price is attracted to the mass of orders at the extreme side.
You can see there in Zone 2 & 4, it is void of many orders with the weight of the market being around the WHITE Monthly lines. This is the weight caused by Big players. Price will almost always zoom through these zones to get to the bottom. There was a trade myself and Two hands were talking about a lot with CADJPY around 8 months ago.
Zone 3 is too hard to trade.
So I am looking for possible pools of orders still opened where the price can just collect them. But here is my statement. This is a area of LARGE GAPS between unopened orders which creates speed in the market which attract traders to jump on board. The final target is normally the edge of this zone.
I love to target and trade on Markets that have a large Space between Monthly Close Lines. My KINGS BOX Strategy was trading in the direction of these monthly lines after a clear intention of this move is occurring. I called this one candle " Intend Candle "
So I am targeting the bottom of that liquidity Zone ( I should put LIQUIDITY TRAP )
I just now believe that supply and Demand should be renamed Small Liquidity pools - they are just small bumps taking us away from the true intent of the market.
This is just what I believe and it works for me -
