Draw on liquidity in gold trading

A draw on liquidity (DOL) is the price target the market appears to be moving toward. In ICT terms it is usually a pool of resting orders, such as a previous day, week or month high or low, equal highs or lows, or an unfilled fair value gap. Identifying the draw is the first step in setting a directional bias.

How it applies to gold trading

Each morning an ICT trader asks: where is gold more likely to go next, the liquidity above or the liquidity below? The answer considers higher-timeframe structure, which side was recently swept and where the nearest obvious targets sit. If the previous day’s low was swept and rejected, the previous day’s high or an equal-highs cluster above becomes the likely draw.

The draw sets both direction and target. Trades are taken in that direction and profits are taken at or just before the draw, rather than at a fixed ratio.

Worked example

Example (hypothetical numbers): gold swept last week’s low at 3,950 on Monday and closed back above it. Above, there are equal highs at 4,040 and the previous week high at 4,062. The draw is 4,040 first, then 4,062. A Tuesday long from 3,995 targets 4,038, just under the equal highs.

A common mistake

Picking the draw after the move. Write it down before the session so it guides trades rather than explains them.

See also: Liquidity, Equal highs and lows, Internal and external liquidity, Previous day high and low.

Frequently asked questions