Beginner📖 20 min read🏷 Foundation
LIQUIDITY CONCEPTS
Why Price Really Moves — The Stop Hunt Mechanism Explained
Here is a truth that will change how you see every chart: price does not move because of news, fundamentals, or technical indicators. Price moves to collect liquidity. And liquidity is nothing more than the stop-loss orders and pending orders of millions of retail traders. Once you understand this — you stop being the prey and start following the predator.
Buy-side liquidity (BSL) sits above highs, sell-side liquidity (SSL) sits below lows
// Lesson Content
In traditional finance, "liquidity" means how easily an asset can be bought or sold. But in ICT, liquidity has a very specific meaning: it's the pool of stop-loss orders and resting orders that banks need to fill their massive positions.
Think about it this way. A hedge fund wants to buy 10,000 lots of EURUSD. They can't just hit the buy button — there aren't enough sellers at one price level to fill an order that large without moving the market against them. So what do they do? They engineer a move DOWN to where retail traders' stop-losses are sitting. Those stop-losses trigger as market sell orders — and the institution buys every single one of them. That's their fill. Then price reverses and shoots up.
This is the entire game. Every major move starts with a liquidity hunt.
📌 Banks don't react to price — they engineer price to reach liquidity. Every major reversal is preceded by a stop hunt.
// Test Your Understanding
// KNOWLEDGE CHECK
1. Buy-side liquidity (BSL) is located...
2. What happens after a liquidity sweep?
3. Equal Highs (EQH) in ICT represent...
// What to study next
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