{"term":{"slug":"liquidity-sweep","term":"Liquidity Sweep","definition":"A price movement that briefly breaks past a key level (swing high/low, equal highs/lows) to trigger stop-losses and pending orders resting at those levels, before quickly reversing. Also called a \"stop hunt\" or \"liquidity grab.\"","extendedExplanation":"Liquidity sweeps are a core concept in smart money / ICT trading. The theory is that institutional traders need liquidity (counterparty orders) to fill their large positions. Stop-losses and pending orders cluster at obvious levels -- previous swing highs/lows, round numbers, and trendlines. Institutions drive price to these levels to trigger those orders, then reverse.\n\nFor prop firm traders, understanding liquidity sweeps is critical for two reasons. First, it explains why stop-losses placed at obvious levels get hit before price moves in the intended direction. Second, it provides a high-probability entry model: wait for the sweep, then enter in the opposite direction.\n\nThe entry model: identify a level with clustered stop-losses (e.g., below equal lows). Wait for price to sweep below and quickly reclaim the level. Enter long after reclaim with stop-loss below the sweep low. This approach often provides tight stops and strong reversals, ideal for prop firm risk management.","exampleWithNumbers":"NQ has equal lows at 17800 with heavy stop-losses below. Price sweeps to 17785 (15 points below lows), triggering stops and buy orders. Within 5 minutes, NQ reclaims 17800 and pushes to 17850. Entry at 17805 (after reclaim), stop at 17780 (below sweep low). Risk: 25 points * $20 = $500 (1 contract). Target: 17880 (75 points). Reward: $1,500. R:R = 1:3. On TopStep $100K, this risks 25% of the daily loss limit.","category":"strategy","relatedTerms":["market-structure","order-block","fair-value-gap","stop-loss"]},"_links":{"self":"https://runvigil.app/api/glossary/liquidity-sweep","page":"https://runvigil.app/learn/liquidity-sweep","allTerms":"https://runvigil.app/api/glossary","learn":"https://runvigil.app/learn"}}