Lesson 3
What is a Liquidity Sweep?
Last updated: 2026-09-28
Quick answer
A liquidity sweep is when price briefly moves beyond an obvious high or low, triggering the stop orders placed there, and then quickly reverses. SMC traders see it as large players collecting liquidity before the real move.
Where liquidity sits
- •Below recent lows: stop losses of buyers, called sell-side liquidity.
- •Above recent highs: stop losses of sellers, called buy-side liquidity.
- •Equal highs or equal lows attract especially many stops.
How to spot a sweep
- 1.Price pushes a wick beyond a clear swing high or low.
- 2.The candle closes back inside the previous range.
- 3.Price then moves strongly the other way.
How the TebotechSignals engine uses it
A sweep is the first required step of every engine setup. For a BUY, price must wick below a prior swing low and close back above it. The stop loss is then placed just beyond the sweep’s extreme, and the setup is cancelled if price later trades past that point.
Common mistakes
- •Calling every new high or low a sweep. A real sweep closes back inside quickly.
- •Entering right at the sweep candle, without waiting for a change of character (Lesson 4).
- •Putting your stop exactly at the swing point, where the next sweep will take it.
Educational content only, not financial advice. Trading forex and gold carries a high risk of loss.