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Key Takeaways
- A sell-side liquidity sweep trades below a predefined low and reclaims it within the selected window.
- A buy-side sweep trades above a predefined high and returns below it.
- The example’s $98 floor is breached on bar 17 and reclaimed at the $99.30 close on bar 19.
- Its $96.90 extreme gives a $1.10 excursion below the floor.
- An assumed $99.30 entry, $96.75 stop reference and $100.60 first objective give distances of $2.55 and $1.30.
What is a liquidity sweep?
A liquidity sweep is a move beyond a selected high or low followed by a close back across that level within a set number of bars. A sell-side sweep trades below a prior low and closes back above it. A buy-side sweep trades above a prior high and closes back below it. Traders also call it a liquidity grab or stop run, because stop orders resting beyond the level can trigger during the move.
Define the level, chart interval and reclaim window before the test. This page uses a completed-close reclaim rule; other discretionary setups use different confirmation windows. Here, the pattern is confirmed only when a bar finishes back across the level. Read the sweep as the place stops typically cluster, and confirm it with the volume spike and the reversal that follows.
How to identify a liquidity sweep: a three-bar rule
Count the first breach bar as bar 1. With N = 3, a reclaim can occur on that bar or either of the next two bars. Use strict price comparisons, so touching the level is distinct from crossing it.
Formula
Sell-side sweep: first breach Li < level, then Cj > level for some j in [i, i + N − 1]. Buy-side sweep: first breach Hi > level, then Cj < level in the same window.- Select the level before the first breach and use completed bars on the chosen chart interval.
- N includes the first breach bar. N = 3 accepts a reclaim on that bar or either of the next two bars.
- Equality is neither a strict breach nor a strict reclaim in this rule.
- Record the most extreme price from the first breach through the reclaim bar.
Liquidity sweep example
A selected $98 floor follows earlier lows of $98.10 and $98. Bar 17 trades to $97.40 and closes at $97.60. Bar 18 extends to $96.90 and closes at $97.20. Bar 19 closes at $99.30, reclaiming the floor within the chosen three-bar window, counted from bar 17.
- Excursion: $98 − $96.90 = $1.10
- Reclaim close above floor: $99.30 − $98 = $1.30
- Rebound from extreme: $99.30 − $96.90 = $2.40
- Assumed $99.30 entry to $96.75 stop reference: $2.55
- First objective $100.60: $1.30 distance; $1.30 / $2.55 = 0.51
- Later $102.20 objective: $2.90 distance; $2.90 / $2.55 = 1.14
The supplied candles next reach $100.60, $101.50 and $102.20 at their closes. Compare each objective with the same $2.55 planned stop distance. The assumed $99.30 entry is the trade-scenario input.
That third bar confirms the reclaim. The excursion below the floor is $1.10, the close is $1.30 above the floor, and the rebound from the extreme is $2.40. Evaluate the event when bar 19 completes.
Liquidity sweep entry, stop and targets
Assume entry at $99.30 with a $96.75 stop reference. Planned distance is $2.55 per share.
The $100.60 first objective supplies $1.30 of distance, a 0.51 ratio. The later $102.20 objective supplies $2.90, a 1.14 ratio. Compare the selected objective with the same entry and stop, then calculate position quantity from the planned dollar budget.
The supplied candles reach both objectives after the reclaim. Use execution prices for an executed trade’s result.
Buy-side liquidity sweep example
The reflected buy-side example crosses above a $102 ceiling, reaches $103.10 and closes back at $100.70. An assumed short entry at $100.70 and stop reference at $103.25 give the same $2.55 distance. Its $99.40 first objective is $1.30 below entry.
How traders use a liquidity sweep
Compare the setup with Volume Profile, filter Options Flow for ask-side buying on the reclaim side, and read the position’s loss at the sweep low and its payoff at the target in the Options Profit Calculator.
A stop order activates a market order. A stop-limit order activates a limit order. Keep these execution instructions distinct from the chart’s excursion and reclaim.
An options sweep order describes executions. The liquidity-sweep rule here describes chart structure. Use each tool for its own part of the decision.
Limitations of liquidity sweeps
- Lock the level, interval and reclaim window before the test, so the candles decide the signal and the settings do not.
- Wait for the reclaim close. Until a bar closes back across the level, the breach looks the same as the start of a breakdown, and in the example price ran on to $96.90 before bar 19 reclaimed $98.
- The rule reads price only. The stop run is a read from the excursion and the reclaim, so check volume and the tape at the extreme to back it.
- Size for slippage past the stop. A stop order becomes a market order, so in a fast move the fill lands beyond the stop reference and the loss runs past the planned $2.55 per share.
- The example’s first objective offers $1.30 against $2.55 of risk, a 0.51 ratio, while the $102.20 objective offers 1.14. Pick the target before entry, because it decides whether the setup pays for its risk.
Bottom line
A liquidity sweep is a failed move beyond a known high or low that closes back across the level. It gives a defined trigger at the reclaim close and a stop reference beyond the extreme. Set the level, interval and window before the test, and judge every objective against the same stop distance.
Clear answers
Frequently Asked Questions
Sources and Further Reading
How entries are sourced, calculated and updated: editorial methodology.