Price Action
Liquidity sweep (stop run)
A quick push beyond an obvious high or low to trigger resting stop orders, followed by an immediate reversal. Often what a long wick or engulfing candle is really showing you.
Also called: stop run, false break
In practice
EUR/USD has an obvious swing low at 1.0800 where many stop-losses sit. Price suddenly dips to 1.0790, triggers those sell stops, then snaps straight back up to 1.0830 — a sweep. The long lower wick is the footprint of stop orders being filled before the real move up.
Why it matters for traders
Sweeps explain why obvious levels so often fail before the real move: institutions hunt the clusters of stop orders sitting just beyond them. Recognising a sweep lets you avoid getting stopped out at the worst price and can even let you enter with the smart money once the wick snaps back, instead of being the liquidity that was hunted.
Common pitfall
Traders place stops exactly at obvious swing highs or lows — the very spot liquidity sweeps target — then get filled at the worst price before the real move. The pitfall is using obvious, round stop locations everyone else uses. Either place stops beyond the likely sweep zone, or wait for the sweep to complete and enter on the snap-back with the larger players, rather than being the stop liquidity that gets hunted.
Lessons that use this term
- Liquidity and stop hunts
Where stop losses cluster, buy-side versus sell-side liquidity, and what a liquidity sweep looks like on a chart.
Related terms
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