Effect: liquidity collected
What was accumulated eventually gets taken: price travels fast to where the orders were sitting.
Effect: liquidity collected — what it is?
The effect is the collection of accumulated liquidity. An impulsive move to the place the orders were sitting — the whole point of the exercise.
It looks like a sharp exit from a quiet state: wide candles, often with an imbalance, distance covered fast.
The key difference between an effect and an ordinary move is that it ends where the liquidity runs out. Having reached the pool and taken it, price often turns.
Effect: liquidity collected — how it is built?
Read it as a pair with the cause: first find the accumulation, then see which pool the move headed for. If the pool has been taken and there is no follow-through, the move was the effect, and a reversal is what to look for next.
Effect: liquidity collected — common mistakes
Entering in the direction of the impulse while it is collecting: that is entering at the end of a move.
Treating an impulse as the start of a trend without checking whether more liquidity lies ahead.
Failing to note which pool exactly was the target.
Expecting a reversal immediately after the collection, without confirmation from structure.
Related to
Glossary
- liquidity
- a cluster of pending orders and stops in a particular zone. The fuel for large capital to move.
- point
- the minimum step of a quote, usually ten times smaller than a pip.
- candle
- the element of the chart that shows four prices for a period: open, high, low, close.
- imbalance
- a stretch of chart price went through too quickly, without even trading.
- accumulation
- the phase where a large participant builds a position inside a sideways range.
- impulse
- a fast directional move with large candles.