Crypto Academy Season 03 - Week 06 | Advanced Course - Trading Liquidity Levels The Right Way. By @endersontowers

According to the reading of his conference @cryptokraze, which was very important since it covers a very important topic that is the issue of liquidity, in addition to topics from previous conferences and we can put this knowledge into practice, all the content was excellent, without further ado What to say, I will carry out my task according to my knowledge, thanks for joining me, let's start!

The liquidity of a financial market refers to the amount of commercial orders between buyers and sellers made in the market, to benefit from the value of the asset, liquidity generates various amounts of orders at certain levels or prices, this to benefit from withdrawing with profits and to retire at a loss.

Through liquidity the chart of an asset can reach new supports or new resistances as the case may be, and when an investor places a buy or sell order at a point, and through liquidity reaches that point, the order is triggered. automatic and will buy or sell immediately and will give liquidity to many other users who have orders at those points reached by this order.

I have heard of many people who have bought a cryptocurrency with liquidity levels at 0, reaching impressive prices and extremely high balances in their wallets, but since there are no buy and sell orders or liquidity that covers its amount of tokens, it will always remain trapped until there is sufficient liquidity in the market.

Below I will present an example of liquidity levels at peak points of the ADA / USDT PAR, with a temporary interval of 1 day in the Binance Exchange, we can observe that at certain levels the price falls through liquidity or purchase and sale orders of the selected points.

Fakeouts in the financial market occurs when retail investors are accustomed to negotiating through certain levels of liquidity (some support or resistance), according to this, a large part of retail investors place trading orders either to buy or to sell through these points to get the best benefit from it.

What happens next is that the large entities that have many amounts of money invested in that cryptocurrency, never want to lose or get out of the profit range, then what they do is that if the level of liquidity reaches a point that it is returning as Usually by retail investors, large entities or also called "whales" inject or sell a certain percentage that changes the course that many retailers had as their objective.

This causes many retail users to change their way of entering or exiting the market, and adding new entry or exit levels, when this happens, what the whales perform is the return maneuver, when the whales see that the price reaches a maximum resistance level, they inject and this causes it to exceed these support levels, making believe that the cryptocurrency is going to rise, this is where many retailers enter and place their orders above or close to that level, what happens is that when the Whales see that the value reached an agreed price, they sell and this causes the value of the cryptocurrency to fall and retail users are trapped in the previous price, waiting for the cryptocurrency to reach that price again to exit or perform another maneuver Thus, the whales sell high and buy below the established price. And they always win.

ADA / USDT, with a temporary interval of 4h in the Binance Exchange, here we observe that the value of the cryptocurrency ADA, reached a level of liquidity where there were many sell orders, which caused the price of the cryptocurrency to return until no have a balance in supply and demand, through this, the whales already had that point marked and they already had a money injection and exit plan, in the next point we see that the value reached the maximum point of liquidity and began to decline Again, what the whales took advantage of and injected a large amount of money to make believe that the cryptocurrency was going to rise, this caused retail investors to join in the purchase, when the cryptocurrency reached a higher price than established by the whales, they sold in quantities, and many users who were still investing in a delayed way thinking that it was going to rise, were trapped at maximum levels because of a bread generated by large entities it is.

XRP / USDT PAR, with a temporary interval of 4h in the Binance Exchange, in this case we see a scenario very similar to the previous one, but more pronounced, we see a level of liquidity where the value of the cryptocurrency fell naturally, and the whales waited that the value of subsequently getting as close as possible to that point of liquidity, when it was almost close, they placed giant buy orders, which caused disorder in the market, and that many retail users changed their levels of buying and selling, when the value of cryptocurrency reached a peak driven by a large part of retail users, as they expected the cryptocurrency to continue to rise, the whales sold on a large scale, leaving many retail investors trapped in the liquidity peak, now they have to wait that the price is back at those standards to make its move.

To enter the market we must be aware of each of the following criteria:

* We must be aware that an accumulation oscillation occurs, or that this occurs through a correction or downtrend.

* We carefully visualize the closing of liquidity of the previous peaks candles, through this we can see how the market behaves with respect to the level of liquidity or maximum resistance and we will have a clear reading of the candles.

* We wait patiently for the new candle to surpass the peak of the previous liquidity levels and this is where we are going to place our buy order.

* We must always take into consideration the Stop loss, to avoid a bad reading in my case I work 10% on the amount.

Using the following criteria we can make a sale movement:

* Attention should be paid when generating a spike in a high level of liquidity or resistance.

* If the new candle is created below this peak or previous liquidity level, it is our selling point.

* To avoid a false positive, it is advisable to wait a bit to see the course of the market's liquidity, in my case I waited until the 3rd peak to place my sell order since the sequence of being created below the previous peak continued.

* It is important to activate the Take Profit.

* The RR Risk / Reward factor should be 1: 1 for beginners.

* We must have a clear objective of when to exit the market generating profits.

* An extremely important point is to activate the Stop Loss.

Here we have another example of Trade Exit using the Risk / Reward factor RR 1: 1

* We must take great care to take an adequate level of liquidity or resistance, also if the strength of the candles is reaching these levels of liquidity with force.

* We will wait for the new candle to break the level of liquidity that we have traced, we will not buy yet.

* When the candle breaks the liquidity level that we have traced, we should not buy, because through liquidity, the candle will retract again, and when it reaches the previous liquidity level it will jump looking for a new peak.

* When the new candle has the jump, we will wait for it to break above the swing point line, the line of the previous peak of liquidity.

* If the line breaks the Swing Point level, it is a valid break and we place our buy order.

* A descending liquidity line or support must be drawn.

* We must wait for the candle that is being created to break the previous liquidity level and this reaches a new liquidity peak and then do a retest on the previous liquidity line.

* We must wait for the candle to make another jump and forcefully break the previous maximum liquidity line or the Swing Point line.

* If the candle breaks the previous maximum liquidity peak, it will be a valid breakout.

* Next we will place our sell order just after passing the Swing Point line.

* We draw a level of liquidity or resistance, generating a better reading of the diagram.

* We very cautiously expect that the candle line will exceed this level of liquidity that we have drawn and that it will reach a new maximum liquidity point which we call Swing Point.

* The candle will bounce off the Swing point line and will return to touch the previous resistance line, and then try to surpass the Swing point liquidity peak again.

* When the candle is above the Swing Point level it is a valid breakout and we must place our order.

* The order is placed just after the candle passes the Swing Point liquidity line.

* We place the Stop Loss as a precaution just below the resistance or liquidity level that I obtained at the beginning.

* And most importantly the Take Profit with RR 1: 1.

* We draw a level of liquidity or support, generating a better reading of the diagram.

* We very cautiously expect that the candle line will exceed this level of liquidity that we have drawn and that it will reach a new maximum liquidity point which we call Swing Point.

* The candle will bounce off the Swing point line and return to touch the previous support line, and then try to surpass the Swing point liquidity peak again.

* When the candle is above the Swing Point level it is a valid breakout and we must place our order.

* The order is placed just after the candle passes the Swing Point liquidity line.

* We place the Stop Loss as a precaution just above the support or liquidity level that I obtained at the beginning.

* And most importantly the Take Profit with RR 1: 1.

Trade configurations of trade exit according to the liquidity lines, through the temporary break strategy (MSB)

Trade exit trade configurations according to the liquidity lines, Using the temporary break strategy (MSB)

Exit trade configurations for the buy position according to the liquidity lines, using the Test Repeated Breakout Strategy (BRB)

Exit trade configurations for the sell position according to the liquidity lines, using the Test Repeated Breakout Strategy (BRB)

The levels of liquidity are very important points for the cryptographic market, since the variation in prices of the cryptocurrency in the market depends on it, we know that many times the level of liquidity is manipulated by the large financial entities that seek to benefit from the money from small investors or investors without knowledge, many times the falsified liquidity points through large entities is noticed with the naked eye, by means of hammer-type candles which indicates that a price reversal is coming.

I can mention that whenever we intend to place an order in the market, we need to follow a business plan, and we must follow it to the letter, without rushing and without waiting too long, in addition to this, we must always take care of a possible exit if it is not gives what was planned.

The temporary breakout strategy (MSB) and the test repeated breakout strategy (BRB), are of utmost importance to trade cautiously and following specific candlestick patterns which provide an excellent reading for our benefit in liquidity levels, always and when we are cautious.

Thanks for reading my homework, the topic was excellent, greetings !.