What is Dynamic Liquidity Zones? Supply & Demand Trading Basics SMC ICT
- VasilyTrader
- Jun 30
- 2 min read
Today, we will discuss the concept of dynamic liquidity zones in trading.
I will explain to you the difference between static and dynamic liquidity zones in SMC ICT.
You will learn how to identify and use them properly.
What is Static Liquidity Supply Zone
Let's start by discussing static liquidity zones.
Static liquidity zones are liquidity clusters that do not shift with time.
Once they are identified on a price chart, they remain fixed no matter when the price returns to them.
That's an example of a static liquidity supply zone on GBPUSD.
It is a horizontal structure cluster that accumulates selling orders.
Whenever the price tests it, this zone will remain at the same levels.
What is Dynamic Liquidity Supply Zone
Now, compare that to EURUSD pair.
As you can see, we have a significant static horizontal supply cluster.
But, it is just a part of a major dynamic liquidity zone that is based on a strong vertical structure - a trend line and a horizontal supply zone.
The upper boundary of that area will be higher with time.
This zone will grow, and selling orders will be concentrated within it.
Dynamic liquidity supply zone is a combination, a confluence of a strong trend line and a static liquidity supply zone that constantly changes over time.
What is Static Liquidity Demand Zone
Above is the example of a static liquidity demand zone on EURJPY.
It is a horizontal structure cluster that accumulates buying orders.
Whenever the price tests it, this zone will remain at the same levels.
What is Dynamic Liquidity Demand Zone
Examine the price action on CADCHF pair.
There is a significant horizontal liquidity demand zone below current prices.
But this liquidity zone is part of a larger, dynamic demand zone.
This dynamic demand cluster is based on a vertical structure - a trend line and this horizontal demand zone.
With time, this zone will expand, becoming wider and wider.
We will expect that buying orders will be concentrated within that entire area.
Dynamic liquidity demand zone is a combination, a confluence of a strong trend line and a static liquidity demand zone that constantly changes over time.
Contracting Dynamic Liquidity Zones
Please note that, depending on the positioning and the direction of a trend line, a dynamic liquidity zone can expand or contract.
On EURGBP pair, we can see a contracting liquidity supply zone based on a falling trend line and a horizontal supply cluster.
And a contracting demand zone based on a rising trend line and a horizontal static demand cluster.
Both dynamic areas become smaller over time.
Summary
Your ability to identify dynamic liquidity zones provides a deeper understanding of a concentration of buying and selling orders on the market.
Integrate this knowledge into your analysis, and good luck to you in trading Smart Money Concepts SMC.
