Nothing Below, Liquidity Above: How I Took The Oct 23 Long
People asked for a review of this trade, so here is every decision in order: the bias, the liquidity, the trigger, the stop, the target and the management. I target liquidity, so this breakdown is about the reasoning, not the result.
Bias: why long
Nothing left to take below, so the algo seeks higher prices.
My bias was bullish. On the Daily we were delivering from an HTF FVG, the Daily raid had been taken, and there was no liquidity left down below. When there is nothing left to take underneath, the algo has to seek higher prices.
The next draw on liquidity was 300+ points away. Between price and that draw, the midnight open, the 8:30 open and the 9:30 open all sat above us, and the path to them was LRL. Low resistance liquidity above and nothing to take below is the cleanest bias I can get.
The liquidity map: premarket, London, overnight
Premarket generates the liquidity. The open manipulates it before it distributes.
Premarket, London and overnight are where liquidity gets generated. The market open manipulates before it distributes, so the open is where that liquidity gets taken.
Session highs and lows are always the better targets. Live traders are trading higher timeframes and using the entire session as their stop loss.
The stage and model: Reversal, Accumulation
Accumulation, then manipulation, then expansion.
On the 1H, this was a Reversal stage using the Accumulation model. The range built up, price manipulated down through the lows to take the liquidity there, and then expanded away. The 1m trade is the manipulation turning into expansion.
The trigger: re-sweep the open lows, CISD again
The entry was the CISD after the open lows got swept again.
Price took the premarket low, then the market-open low. Then it re-swept the open lows and gave a CISD again. That was my entry.
A sweep is a sign of bullish order flow coming into the market. A CISD is a bullish PDA, so it should send bullish signals to the market. And the lows kept re-sweeping with strong bullish reactions, which tells me there was no desire to travel lower.
I took it on the close and retest. I backtested the last 4 years and the CISD is tagged over 90% of the time. It is the PDA that actually signals to the market that it is time to change direction.
Stop and target
The stop went where the idea is wrong. The target was the liquidity.
My stop was below the protected low. That low had already run out all the liquidity there is, so there is no reason for price to come back and see those lows again.
The target was the session liquidity from step 02. On futures you can adjust your size, so I scaled down to make sure I was not over-leveraged.
Management: trim and trail
Take the levels the market gives you, trail the rest.
I trimmed 80% at the premarket highs. I trimmed another 10% at the midnight open and trailed the rest in profit.
Really nothing. This idea should have worked: there was no more liquidity to target below us. If price had delivered lower anyway, that would have been manual intervention, and the read would have been wrong.
If we had ripped up at the open and taken out the LRL above, there would be no target left. No target, no trade.
I still get nerves. But I have journaled every day for the last 3 months and refined my entry, and if you are nervous about a trade it usually means you do not have enough data on it. So make sure you are sized properly, accept the outcome, and journal after.
Trade toward liquidity, and put your stop where the idea is wrong.
When the lows below are already taken, the draw above is clean, and the CISD flips delivery, the trade is a checklist. The direction was obvious. The entry only appeared after the sweep and the CISD, and that is the part to wait for.
The 4 stages, the CISD and the draw on liquidity are all taught in the free Essentials classes. We hunt it live on Discord every trading day.