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Liquidity Pool

Volume Price Analysis glossary · Volume Price Analysis

Definition

A price level holding a concentration of resting stop orders (above resistance, below support); attracts price action that targets and triggers them.

Liquidity Pool in plain English

When traders open a position, many leave an automatic 'stop' order that says 'if price hits this level, close me out to limit my loss.' These stops naturally cluster just above obvious highs and just below obvious lows — everyone thinks alike. A Liquidity Pool is one of those clusters: a spot loaded with resting orders. It's like a puddle of easy business, and because triggering a flood of stops creates instant buying or selling, price is often drawn toward these pools to 'tap' them before reversing — which is why traders watch these levels closely.

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