📖 Financial Lexicon Term
What is Liquidity Sweep?
A sudden price spike designed to trigger retail stop losses resting above or below obvious support and resistance levels.
Detailed Explanation
Retail traders are taught to place stop losses just above resistance or below support. This creates pools of liquidity. Institutional algorithms 'sweep' these levels to absorb the orders, giving them enough volume to fill their massive positions in the opposite direction.
💡 Practical Trading Example
Price spikes 10 pips below a major support level, taking out retail buyers, before immediately rocketing upwards.