Liquidity Sweep + MSS + Displacement + Retest: A Clean 4-Stage High-RR Strategy

The four stages in order

1. Sweep. Price wicks through a pool of stop orders — the previous day or Asian high or low, equal highs or lows, or a recent swing — and closes back inside the old range. A close beyond the level is a breakout, not a sweep.
2. Market-structure shift (MSS). A candle then closes beyond the last swing point in the opposite direction. For a long that means a close above the most recent lower high. Wicks beyond the level do not count.
3. Displacement. The move that creates the shift must be impulsive: a candle with a body of at least 1.2 times the average candle size (ATR) that closes in the top quarter of its range (bottom quarter for shorts). It usually leaves a fair value gap — three candles where the wicks of the first and third do not overlap.
4. Retest. Price returns to the fair value gap (or the broken swing if there is no gap). The entry sits in the middle of that zone, or on a rejection candle inside it.

Candles to expect before you enter

Why displacement matters

A slow, overlapping break of structure is often just a pause. A fast, one-directional candle shows that orders were aggressive enough to overwhelm the other side, which is why price tends to respect the imbalance it leaves behind. Requiring displacement filters out a large share of false shifts.

Stop and target

Stop: just beyond the sweep extreme (a quarter of an ATR of buffer). If price trades back through it, the sweep was a real breakout. Target: the nearest opposite liquidity pool that pays at least 3 times the risk. If none does, the scanner uses a 3R projection; the setup is only high quality when the target is a real liquidity level.

Common mistakes

• Entering at the sweep candle instead of waiting for stages 2 to 4.
• Accepting a wick through the swing as a structure shift.
• Trading shifts that are not impulsive.
• Taking the trade when the target is less than 3R away.
• Ignoring the daily trend. See multi-timeframe analysis.

How Forextity checks it

The scanner reports which stage the chart has reached (0 to 4) and shows entry, stop, target and reward:risk only when stages 1 to 3 are complete. The Setup Radar can scan ten markets for it. Related reading: ICT concepts and Smart Money Concepts. Size each trade with the ATR Stop & Size tool and test streaks with the Stress Test.

High reward-to-risk strategies win less than half the time, so losing streaks are normal. Risk a small fixed percentage per trade.

Risk notice: educational content, not financial advice. Leveraged trading carries a high risk of loss. Read our Risk Disclaimer.