Discussing the article: "From Novice to Expert: Developing a Liquidity Strategy"
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Check out the new article: From Novice to Expert: Developing a Liquidity Strategy.
Liquidity zones are commonly traded by waiting for the price to return and retest the zone of interest, often through the placement of pending orders within these areas. In this article, we leverage MQL5 to bring this concept to life, demonstrating how such zones can be identified programmatically and how risk management can be systematically applied. Join the discussion as we explore both the logic behind liquidity-based trading and its practical implementation.
Through our analysis, we have established that a liquidity zone can often be represented by a single candle. Such a candle typically emerges after a period of price pause or consolidation and encapsulates liquidity that has formed over time or across lower timeframes. This behavior is precisely what produces the structural model we are working with in this study.
For clarity and accessibility, we deliberately adopt a simplified approach. Rather than relying on complex multi-bar formations, we define our conditions using minimal price information. This allows us to focus on the core mechanics of the strategy while making the initial implementation in code straightforward and easier to validate.
The objective of this strategy is to return price to the identified liquidity structure (see Fig. 1 below) and build positions from that area, ultimately targeting the most recent swing high or swing low, depending on whether the setup is bullish or bearish. While the concept of a retest is central to this model, it is also important to recognize that it has become a common and widely studied idea. As a result, such levels are increasingly vulnerable to manipulation. Market participants with significantly larger capital can push prices beyond obvious boundaries, triggering stop losses and forcing weaker positions out of the market before the intended move unfolds.
Author: Clemence Benjamin