Liquidity sweep
A liquidity sweep is a move that briefly passes beyond a prior swing high or low, where stop orders are assumed to sit, and then returns. It is a term from ICT-style trading teaching.
How Liquidity sweep is calculated
One testable definition: a bar's high exceeds the highest high of the previous n bars, but the bar closes back below that old high. The mirror image applies to lows. Without numbers for n and for how far it must exceed, any wick can be called a sweep.
How it is read
The story is that a move triggers resting stops, big players fill against them, and price reverses. The measurable part is only whether reversals follow more often than they would by chance.
Common mistakes
- Naming a sweep in hindsight. Almost every reversal has a prior high that was passed.
- Skipping the control: how often does price reverse after a bar that did not sweep anything?
- Ignoring fees on a rule that trades many sweeps a day.
What Tickfloor tested
Tickfloor's research desk has backtested 678 strategies, net of modelled trading costs. After correcting for the 761 tests run, 0 passed. That does not prove no strategy works. These are historical diagnostics, not validation under Testing Standard v2: the backtest harness predates that standard and has not been re-run to meet it.
- The TJR / ICT sweep and fair value gap model (claim test)
- ICT Asia session liquidity sweep, hourly crypto version (claim test)
Related concepts
General information only. It doesn't consider your objectives, finances or needs. Tickfloor holds no financial services licence and never places trades.