What is Liquidity (Smart Money)?
Clusters of resting orders — stops above swing highs (buyside) and below swing lows (sellside) — that act as magnets for price. Smart money raids these pools before reversing.
In the ICT framework, liquidity means clusters of resting orders. Buyside liquidity sits ABOVE swing highs: stop-losses of short sellers plus breakout buy-stops. Sellside liquidity sits BELOW swing lows: stops of longs plus breakdown sell-stops. Equal highs/lows and trendlines concentrate even larger pools because more participants anchor orders to them.
Price is drawn toward these pools — they are where large orders can be filled with minimal slippage. The classic smart-money sequence: sweep the pool (trigger the resting orders), absorb the liquidity, then reverse in the intended direction.
Reading liquidity turns a chart into a map: mark the pools above and below, and you have the algorithm's most probable destinations before the move happens. Internal pools (inside a dealing range) get raided before external pools (at the range extremes) — the IRL → ERL delivery rhythm.