Liquidity Pool

A liquidity pool is a price area where a large amount of resting stop orders is concentrated — typically above a prior high, below a prior low, or around equal highs/lows.

The more times a level has been tested without breaking, the larger the liquidity pool sitting there, and the more likely it becomes a target for a future price move.

Mapping out the liquidity pools available above and below current price is one of the first steps in ICT analysis: they show where the market is likely to reach for before resuming its real direction.

Where to find them concretely: below the previous day’s low and above its high, around equal highs and equal lows, at the edges of the Asian session range, and beyond round numbers. These areas are not mysterious — everyone can see them, and that is exactly what makes them reservoirs of orders.

Not all pools are equal. Three criteria separate them: age (a weekly low untouched for a fortnight has accumulated far more orders than a low from the last hour), number of tests (each rejection adds another layer of stops), and visibility (a level everyone draws attracts more orders than an obscure one).

How to use them? A pool is a destination, not a signal. Before opening a position, ask which pool price is most likely to reach for, and set your target just before it — not inside it. Conversely, if your setup has you entering while a large pool sits right behind your stop, know that you are betting against the market’s natural pull.

The classic mistake: targeting the pool as an exact objective. Price frequently reaches the area without fully crossing it, then turns. A take-profit set a few points before the level gets filled; one set on the level watches price leave without being touched.

Second trap: ignoring pools that sit against your bias. A buyer looking only at pools above misses the point: it is often the pool below that gets taken first, invalidating the entry before the expected move even starts.

Related terms