Assumed Liquidity - Structural

Most traders know liquidity as stop orders on structural extremums—above structural highs and below structural lows.

This hypothetical liquidity type is assumed.

Assumed liquidity is defined as stop-order reversals on both sides of long-ranges or structural tops and bottoms.

Teaching about this type of assumed liquidity came from   Smart Money and Price Action trading movements and is commonly spread among Forex traders and Forex brokers. 

The problem with forex brokers and traders believing in hypothetical liquidity is a detection method known as "guestimation." 

The key:  Assumed liquidity is hypothetical and not reliable. 

Real liquidity - detected on Level 2

Real liquidity is based on passive orders on the order book. 

Those orders are passive orders, waiting for the price to engage with aggressive orders by the market.   For any market orders (level 1 data),  there is a passive limit order ( level 2 data). 

• Market sellers never sell to market buyers.
• Passive sell orders never engage with buy passive orders.

The aggressive market participants can not move the price in any direction unless they use liquidity from passive participants.

Real liquidity is based on hardcore data and statistics from centralized exchanges like the CME Chicago Exchange.

One point to remember:

• Real liquidity detected as passive orders on Level 2 data
• Real liquidity is visible only with indicators level 2 :
  - Delta 2, Pulling/ Stacking/ Market Depth

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