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Liquidity pool

An area of the chart where many resting orders are likely to sit, usually just beyond an obvious high, low or round number.

The term describes a region, not a precise level. Above a cluster of equal-highs, below a prior-day-high-low, or around a round-number-level, the order book tends to hold stop orders and breakout orders that will execute if touched.

Large participants who need to move size prefer to transact where there is something to trade against, so price often travels toward these areas rather than away from them. That is the argument behind targeting obvious levels rather than avoiding them.

Understand the epistemic limit: retail traders cannot see resting stops. The pool is inferred from the chart, not observed. Treat it as a reasonable guess about where activity will concentrate, not as data.

Related: liquidity-sweep, equal-highs, equal-lows, round-number-level, order-book

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Bid-ask spread in an order bookSell orders stacked above buy orders with a gap between the best of each.SELLERS (asks)50.0690050.051,40050.0460050.011,10050.002,30049.99800spread = 0.03BUYERS (bids)
The bid-ask spread. Buy orders sit below, sell orders above, and the gap between the best bid (50.01) and best ask (50.04) is the spread you pay to cross. Bar length shows the size resting at each price.

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