Trading strategies
Liquidity sweep
Definition
A quick move through such a level that triggers the stops resting there, then closes back on the other side. Also called a stop run.
Example
Suppose a stock has equal lows at $40.00 and $40.02, with sell stops clustered just below. A candle drops to $39.80, triggering those stops, then closes at $40.35, back above the lows: a liquidity sweep. Had it closed at $39.70 instead, it would be an ordinary breakdown, and even a clean sweep says only where to look, not when to buy.
Hypothetical numbers, for illustration only.
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