ICT Liquidity Pool – Trade Like a Pro

Being an ICT trader do you want to learn about ICT liquidity pool in depth?

Well, in this blog post we will teach you everything about ICT liquidity pool from its definition to identification and to its use in trading with examples.

Now lets start with defining the ICT liquidity pool.

What is ICT Liquidity Pool?

To understand ICT liquidity pool first you have to learn about Liquidity. Liquidity means the willing buyer and sellers who want to sell/buy at market price.

Mostly the retail traders buy or sell at market price while the smart money buys below market price and sells above the market price.

You have to look where the most retail traders be willing to buy or sell. Mostly they will be buying above an old high after breakout and selling below the old low as a breakout trade.

Or if they already bought they will put their sell stop below old low to mitigate their loss and if they already sold they will put their buy stop above an old high.

So the old highs have a pool of liquidity resting above them in the form of sell stops and the wiling sellers to sell after breakout.

And old lows have a pool of liquidity resting below them in the form of sell stops or willing sellers at market price after breakout of low.

That is why the area above an old high and area below an old low are termed as ICT liquidity pool.

And smart money / ICT traders look to trade these liquidity pools against retail traders.

Bullish ICT Liquidity Poll

Bullish liquidity pools are areas on the price chart where smart money traders look to buy.

As we discussed earlier below the old lows sell side liquidity rests in the form of sell stops.

So in bullish trend you will look for Discount Zone to buy when price goes below an old low clearing the sell side liquidity.

In this case you will be buying against the sell orders of retail traders and price will most likely go higher to target buy side liquidity.

Your stop loss in this scenario will not be more than 40/50 pips as price should not go much lower below an old low.

For take profit you will target the old highs as buy side liquidity.

Bearish ICT Liquidity Poll

Bearish liquidity pools are areas on the price chart where smart money traders look to sell.

As we discussed earlier below the old highs buy side liquidity rests in the form of buy stops.

So in bearish trend you will look for Premium Zone to sell when price goes above an old high clearing the buy side liquidity.

In this case you will be selling against the buy orders of retail traders and price will most likely go lower to target sell side liquidity.

Your stop loss in this scenario will not be more than 40/50 pips as price should not go much higher above an old high.

For take profit you will target the old lows as sell side liquidity.

Do We Need Confirmation to Trade ICT Liquidity Pool?

No you do not need any confirmation while executing trade using ICT liquidity pool.

You just need to set a 40/50 pips stop loss because price just seek liquidity and returns after targeting the highs or lows.

How Much We should Risk per Trade?

You should risk only that amount which you can afford to lose.

Standardly you should risk only 1% of your capital per trade.

Is ICT Liquidity Pool a Reliable Model?

Yes it is one of the reliable trading model from ICT teachings. But to get better results you should have a correct direction and bias of the market.