When the market is unbalanced: How to leverage liquidity and order flow to chart your course

What separates ordinary traders from professionals? It’s the ability to read the market structure like an open book. And to master this skill, you need to understand three fundamental elements: how liquidity concentrates, where orders pile up, and how supply and demand zones create opportunities. Forget complicated indicators—focus on what truly moves the price.

The Supply-Demand Battlefield: Where It All Begins

Before talking about imbalance trading or order flow, you must understand the fundamentals: supply and demand. It’s the market’s nervous system.

A supply zone forms when sellers dominate after a massive sell-off—that’s where prices stagnate or retreat. A demand zone appears when buyers step in after a rally—that’s the natural support point. Price respects these zones with remarkable consistency.

Here’s what happens concretely: the price drops from a supply zone, seeks support at a demand zone, then rises again to test the supply. Repeated interactions at these levels reveal where the market is truly headed.

How to use it? Identify your supply zones (after a decline) and demand zones (after a rise). If the price approaches a demand zone with a bullish signal (bullish candle), it’s a potential buy signal toward the next supply. If the price breaks through a supply zone with strong momentum, short this breakout. This is trading based on the market’s true forces.

Imbalance Trading: When Price Moves Too Fast

This is where it gets interesting for traders seeking precise entries. Imbalance trading focuses on a simple phenomenon: when the price jumps too quickly, it leaves behind “holes” in liquidity—levels where little trading has occurred.

Imagine the price surging upward. It moves so fast that it doesn’t capture all the orders along the way. This creates an imbalance. The market, by nature, hates inefficiency. It always “fills the void”—meaning it revisits these imbalance zones.

These zones are your potential exit points. If you go long and identify an imbalance above the current price, set your take profit just before that level. Why? Because the price will likely pause descending at that level or break through with volatility.

How to recognize it? Look for sharp price movements accompanied by low volume, or visible gaps between candles. On your chart, these zones appear as visual gaps. Every time the price crosses these levels without significant trading activity, it’s a potential imbalance trading setup.

Pro tip: don’t just identify the imbalance—use it as a test zone. The price often revisits it two to three times before continuing its trend. Patience and accumulation at strategic levels—that’s what pays off.

Order Flow: The Art of Trapping Liquidity

Now, let’s talk about order flow—probably the most powerful tool to anticipate reversals. It directly concerns how long and short traders place their protective stop-loss orders (stop-loss).

Here’s how it works: after a swing high, long traders place their stops just below. After a swing low, short traders place theirs just above. Market makers and savvy traders know this. They intentionally sweep these levels to grab that liquidity, then reverse.

When the price plunges below a swing low to catch short stops, it creates a “sweep”—a liquidity pickup on the buy side. Immediately afterward, the price usually rebounds because smart money has already taken positions. This is your signal: buy the sweep, sell shortly after.

How to act? Identify key swing highs and lows on your chart—these are your stop concentration zones. Wait for the price to sweep them (confirm liquidity has been captured), then take the opposite reversal. Order flow reveals where traps are set.

The key here? Discipline. Don’t front-run the sweep. Wait for confirmation that the market has truly captured liquidity, then enter. It’s a game of anticipation, not haste.

Piecing It All Together: An Integrated Approach

The secret to effectively using market structure is to combine these three concepts:

Step 1 - Spot the structures: Map your supply and demand zones. These are your guiding boundaries.

Step 2 - Identify imbalances: Within these zones, spot quick moves with low volume. These are your precise profit targets.

Step 3 - Read the order flow: Observe how price interacts with swing highs and lows. Sweeps are your reliable entry signals.

Step 4 - Validate and execute: Use candlestick patterns or volume confirmations to validate. Then execute.

A concrete example: the price approaches a demand zone, sweeps the stops below the swing low (confirmed order flow), then rises again. You identify an imbalance zone above the current level. Enter long on the sweep, with a profit target at the imbalance zone. Place your stop below the swept swing low.

This is pure structure, no noise.

The Advantage of the Structure Trader

Understanding these mechanisms—imbalance trading, order flow, and supply-demand zones—is not optional for serious traders. It’s your foundation. Charts tell a precise story, and that story revolves around liquidity, stop placement, and exploitable imbalances.

Now, it’s your turn. Take your charts, apply these concepts, and test them. The market awaits those who can read its true structure. Become one of them.