What Is a Liquidity Sweep?

What is a liquidity sweep?

A liquidity sweep is when price deliberately runs beyond an obvious swing high or swing low to trigger the stop-loss and pending orders resting there, then quickly reverses. Those resting orders are liquidity, and large players need liquidity to fill their positions. Sweeping it lets them enter at a better price before driving the real move.

It is also called a stop hunt, liquidity grab, or stop raid. The tell is a sharp spike beyond a level followed by an immediate rejection back inside the range.

Where liquidity rests

Stops and pending orders cluster in predictable places:

• Above equal highs and below equal lows (double tops / double bottoms).
• Beyond obvious swing highs and lows.
• Around session highs and lows (Asia range, previous day high/low).
• On round numbers and trendlines everyone can see.

How to trade a liquidity sweep

The classic sequence is: price sweeps a level, then prints a change of character on a lower timeframe (a shift in structure back the other way). Traders enter on the reclaim, place the stop beyond the sweep wick, and target the opposing liquidity pool. The sweep itself is the trap; the confirmation is the structure shift after it.

Avoid entering on the spike alone. A sweep without a follow-up structure shift is just continuation, not a reversal.