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What is a liquidity sweep in trading?

A liquidity sweep is when price runs past an obvious high or low, triggers the stops resting just beyond it, then turns back the other way. Here is how to spot one, how it differs from a break of structure, a simple setup to practice it and how to journal it.

Buy-side and sell-side sweeps

A buy-side sweep runs above a high, where buy stops and breakout buy orders sit, then falls back. A sell-side sweep runs below a low, where sell stops sit, then climbs back. In both cases, the orders beyond the level get filled and price fails to continue.

Where liquidity sits

  • The previous day’s high and low (PDH and PDL).
  • The overnight session’s high and low, and the first range after the open.
  • Round numbers, like 21,000 on NQ.
  • Equal highs or equal lows: two or three touches at the same price.

A sweep, step by step

PDLSweepStopTarget · 2RReclaim · entry
Long after a sweep of the previous day’s low: price trades below PDL, a 5-minute candle closes back above it, entry at its close, stop a few ticks under the sweep, target at 2R.
  1. Before the session, mark the previous day’s low.
  2. During the session, price trades below it: the stops beyond it are triggered.
  3. A 5-minute candle closes back above the level: the move failed to continue.
  4. That close is the trigger of the Sweep Setup below. Sample data: no recommendation.

Sweep or break of structure?

A break of structure is the opposite: price closes beyond the level and holds there, and the next pullback respects it. If the candle closes back inside, it’s a sweep. If it closes and holds beyond, it’s a break: no sweep trade.

PDLCloses and holds below: a breakout. Skip it.
Not a sweep: price closes below PDL and holds there. That’s a breakout, so there’s no trade.

Common mistakes

  • Calling every wick a sweep: wait for the close back inside the level.
  • Entering before the reclaim candle has closed.
  • Forgetting the economic calendar: a release can sweep a level both ways in seconds.
  • A stop placed inside the noise, right at the extreme of the sweep.
  • Trading every sweep of the day instead of the ones in your window.

A simple setup to practice it: the Sweep Setup

The setup of Month 1 of the 90-day gameplan: the previous day’s high or low, a 5-minute reclaim, a fixed 2R target (see R multiple).

LevelsBefore your session, mark the previous day’s high (PDH) and low (PDL). Nothing else.
SweepDuring your window, price trades beyond PDH or PDL.
ReclaimA 5-minute candle closes back inside the level. Sweep of PDL + reclaim = long. Sweep of PDH + reclaim = short.
EntryAt the close of the reclaim candle.
StopA few ticks beyond the extreme of the sweep.
TargetFixed 2R. No early exit, no moving the target.
Skip it ifYou’re in a news window · the stop is bigger than your max risk with 1 micro · price closes and holds beyond the level (that’s a breakout, not a sweep) · you already hit your daily stop.

Calculate the risk before you click: on MNQ, a 25-point stop is $50 on 1 micro; on MES, a 10-point stop is $50. If the stop is bigger than your max risk with 1 micro, skip it. Not sure which micro to use? See MES or MNQ.

  • Train it in replay first: 5 past days with PDH and PDL marked, 10 historical setups (failures included), 5 lookalikes that break a rule.
  • Grade each one: A when every criterion is clean, B when it’s valid but messy.

How to journal sweep setups

  • Log every sweep you take or pass, with a screenshot of the level and the reclaim.
  • In Sweep, give those trades the setup “Sweep” and tag the level (PDH or PDL) and the time block.
  • After 20 to 30 trades, compare your results by setup and by tag. Edge Reveal points out your most profitable setup in R, and your coach tells you when a trade is in your edge.

Everything Sweep does with your trades is on the features page.

Part of the free 90-day gameplan for new prop firm traders. Educational content, not financial advice. Trading futures involves a high risk of loss and is not suitable for everyone. The Sweep Setup and the size ladder are learning tools, not recommendations or proven strategies. Buying an evaluation is your own decision. Always check your prop firm’s official rules for your account.

Questions

What is a liquidity sweep in trading?

A move beyond an obvious high or low that triggers the stops resting just beyond it, then turns back the other way instead of continuing.

What’s the difference between a buy-side and a sell-side sweep?

A buy-side sweep runs above a high, through the buy stops, then falls back. A sell-side sweep runs below a low, through the sell stops, then climbs back.

Is a liquidity sweep the same as a stop hunt?

Traders often use both words for the same move: price runs the stops beyond a level, then turns. Your journal only needs the facts: the level, the run, the reclaim.

What do PDH and PDL mean?

The previous day’s high and low. They’re marked before the session and don’t move during the day.

Which timeframe confirms the sweep?

In the Sweep Setup, a 5-minute candle: it has to close back inside the level. Entry is at the close of that candle.

Is trading liquidity sweeps profitable?

Nothing guarantees it. Whether sweeps work for you is something only your own tagged trades can show, over many trades.

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