DRAW ON LIQUIDITY

Draw on Liquidity (DOL) is used by some ICT traders to nominate a possible price objective, often a prior high or low. These areas may coincide with orders, but a chart alone cannot confirm the exact orders present or the reason price might approach a level. Some ICT narratives describe price as moving between candidate liquidity levels. Actual moves can be influenced by many factors and may not reach a marked level; treat each DOL as a hypothesis to test, not a known destination. A chart-based scenario can inform where you would monitor or plan a target, but cannot establish in advance how far price will travel or whether it will continue or reverse. Mark alternatives and define what invalidates the scenario rather than assuming the target will be reached.

The DOL exists in one of two forms: EXTERNAL RANGE LIQUIDITY (ERL): Liquidity that sits OUTSIDE the current price range -- beyond the swing highs and swing lows. This includes: previous swing highs (BSL), previous swing lows (SSL), equal highs and equal lows, previous week highs/lows, previous month highs/lows, and major round numbers. In ICT terminology, ERL (external range liquidity) refers to candidate reference areas outside a defined range, such as prior highs and lows. The label does not prove that institutional orders are resting there or that price is being delivered to the level. INTERNAL RANGE LIQUIDITY (IRL): Liquidity that exists WITHIN the current price range -- inside the dealing range. This includes: unmitigated FVGs, Order Blocks within the range, Balanced Price Ranges, and NWOG/NDOG gaps within the range. In ICT terminology, IRL (internal range liquidity) refers to candidate reference areas within a defined range, including imbalances or zones that a trader has marked by a consistent rule. Price may revisit these areas, bypass them, or move through the range in another way; a fill is not required. One scenario to test is a move through an external reference, a retracement toward an internal reference, and then a continuation. Price may instead fail, range, reverse, or never reach the candidate levels. Define observable criteria and invalidation before testing the sequence.

Before every trading session, run this DOL identification process: STEP 1 -- Mark all ERL above price: • Previous swing highs • Equal highs (EQH) • Previous day high, previous week high • Round numbers above current price STEP 2 -- Mark all ERL below price: • Previous swing lows • Equal lows (EQL) • Previous day low, previous week low • Round numbers below current price STEP 3 -- Mark all IRL: • Open FVGs on 4-hour and daily charts • Unmitigated Order Blocks within the current range • NWOG and NDOG gaps STEP 4 -- Select candidate reference areas: Using your written model, identify which marked levels fit the current scenario. A bullish or bearish bias may help prioritize a candidate area, but it does not show which level the market will reach. Record alternative scenarios and define what would invalidate each one. STEP 5 -- Treat this as a candidate target; compare it with invalidation, risk, and your tested exit rules before entering.

Consider a hypothetical chart where prior equal highs are visible above price and a bullish structure pattern has formed. An ICT trader may nominate those highs as a possible objective and an FVG as a potential retracement area. This is a planning scenario—not a known algorithmic destination. Price may reach the highs, reverse first, or continue elsewhere. Before entering, define the setup trigger, invalidation, stop, exit rule and maximum acceptable risk. Record whether the target was reached under a fixed time horizon, and include cases where no trade triggered or the thesis failed. Avoid changing the target after observing the outcome.

A DOL plan can become unreliable when a trader treats a marked level as inevitable, moves a target after price changes, or labels every subsequent move as confirmation. Mark candidate levels before the session, identify alternative scenarios, and specify what would invalidate each one. Compare the nearest candidate level with more distant levels using consistent rules. Track frequency, maximum adverse excursion, time to target, and expectancy after costs; do not assume a closer level must be reached first.