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Building Your Own Execution Model Using Liquidity Zones

In the current 2025 market, price is driven less by simple chart patterns and more by where liquidity sits. Gold XAUUSD trades around key handles near 4200, Bitcoin whips around major psychological levels above 90000, and forex pairs react sharply to every shift in rate cut expectations and inflation data. If you enter randomly in the middle of these moves, you become the liquidity. If you build a clear execution model around liquidity zones, you start trading with structure, not emotion.

An execution model is simply a repeatable set of rules that tell you when and where to enter, place stops and take profits. Instead of guessing, you wait for the market to reach your pre defined liquidity zones, show specific behaviour, and then you execute. This article will help you design your own liquidity based execution model that fits gold, forex and crypto in today’s environment.

For a deeper breakdown of liquidity zones, smart money concepts and live XAUUSD examples, explore the education at Liquidity By Murshid.

Step One Define The Role Of Liquidity In Your Trading

Before you draw any zones, you must decide what liquidity means in your model. In simple terms, liquidity zones are areas on the chart where many stop losses and pending orders gather. These are usually previous highs and lows, equal highs and equal lows, fair value gaps and psychological levels. Smart money pushes price into these zones to fill large orders and then moves away once enough liquidity has been collected.

In your execution model, liquidity zones will have two main roles:

As targets where you expect price to travel during a move.
As entry areas where you look to join the move after a sweep and confirmation.

Once you see liquidity as opportunity instead of danger, your mindset shifts. You stop being surprised when price spikes through your levels; you start expecting it and planning for it.

Step Two Choose Your Higher Timeframe For Bias

Every execution model needs a higher timeframe bias. In the 2025 environment, where macro events push markets strongly, relying only on low timeframe signals is dangerous. Weekly and daily charts show you whether you should focus on buys, sells or only very selective trades.

A simple approach is:

Use D1 and H4 to define trend and key swing points.
Mark the most recent daily and weekly highs and lows as external liquidity.
Decide whether you are primarily looking for buys, sells or range plays for the next few days.

For example, if gold is in a clear daily uptrend with higher highs and higher lows, your execution model should prioritise long entries from liquidity zones below price instead of aggressive attempts to short every new high.

Step Three Map Your Main Liquidity Zones

With bias in place, you map the liquidity zones that matter for your execution. These zones become the backbone of your model. You will not trade everywhere on the chart; you will trade mainly where liquidity is concentrated and where smart money has a reason to act.

On D1, H4 and H1, mark:

Previous day high and low and previous week high and low.
Clean swing highs and swing lows with visible reactions.
Equal highs and equal lows that stand out as obvious stop clusters.
Important psychological levels such as 4200 and 4100 on gold or round numbers on BTC and major pairs.

These are your external liquidity zones. Your entries will often come from sweeps of these levels or from imbalances connected to them.

Step Four Add Fair Value Gaps For Precision

Fair value gaps FVGs and imbalances give precision to your entries. In 2025, macro driven spikes in gold, indices and crypto frequently leave clean FVGs on H1 and H4. Price often retraces into these gaps later to rebalance before continuing.

To integrate FVGs into your execution model:

Identify strong displacement moves that break structure after a liquidity sweep.
Mark the unfilled portion of the fair value gap created by these moves.
Use these FVGs as the core entry zones inside larger liquidity areas.

Your model can then say something like After buy side liquidity has been swept in a bullish market, wait for price to return to the bullish H1 FVG to look for long entries.

Step Five Define Your Trigger Conditions Inside The Zone

A liquidity zone by itself is not an entry. You still need a trigger condition. This is where many traders go wrong. They mark great zones but then enter immediately when price touches them, without waiting for any confirmation. In a fast market, price can slice through levels easily before reversing later.

Your execution model should specify what must happen inside a zone before you click buy or sell. Examples of triggers include:

A clear liquidity sweep wick above or below the zone on M15 or M5.
A strong displacement candle in your higher timeframe bias direction.
A small internal FVG or micro order block forming right after the sweep.

Your rule could be simple Enter long only after a sweep of the low, followed by a strong bullish M15 candle closing back inside the range. Without that sequence, the zone is observed but not traded.

Step Six Set Clear Stop Loss And Take Profit Rules

An execution model is incomplete without risk and reward rules. Liquidity zones give you logical places for both stops and targets. Smart money uses stops as liquidity, so you must place yours with intention.

A clean liquidity based approach is:

Place stop loss beyond the liquidity that has just been swept, not inside the zone.
Target the next opposite side liquidity pool previous high or low, or a key psychological level.
Use partial take profits at internal liquidity areas to lock in gains while keeping some exposure.

For example, if you buy gold from a sweep of a daily low and an H1 FVG, your main target could be the previous day high, with partial profits at intraday equal highs.

Step Seven Integrate Timing Sessions And News

Even the best zones and triggers can fail if your timing is wrong. Liquidity in 2025 shifts strongly around London and New York sessions and around news like CPI, NFP and central bank decisions. Your execution model must say when you are allowed to trade as clearly as it says where to trade.

Practical timing rules might be:

Execute only during defined active windows for your instrument London and New York for XAUUSD and major FX, key overlaps for crypto.
Avoid new entries a set number of minutes before high impact news unless you have a specific news strategy.
Give extra weight to setups that occur shortly after a news driven sweep of a major liquidity zone.

This way your model respects both price and time, just like institutional flows do.

Step Eight Write Your Model As A Checklist

The final step is to turn everything into a simple written checklist. If your execution model only lives in your head, emotions will override it during live trading. A checklist keeps you accountable and makes it easier to review your trades later.

A sample long side execution checklist could look like this:

Daily and H4 bias bullish.
Price trades into a marked downside liquidity zone previous low, equal lows or psychological level.
Sweep of the low occurs during an active session London or New York.
Strong bullish displacement candle forms on M15 or M5, leaving an FVG.
Entry on retrace into that FVG, stop below the swept low, target next upside liquidity.

You can mirror this for short setups. Over time, you refine rules based on your personal data and screenshots, not based on random opinions online.

Conclusion Make Liquidity The Center Of Your Execution

Building your own execution model using liquidity zones is not about copying someone else’s screenshots. It is about understanding how modern markets move, then designing clear rules that fit that behaviour. In a 2025 environment dominated by macro events, algorithmic flows and crowded positioning in gold, forex and crypto, liquidity is the real driver. When you map where that liquidity sits and wait for price to interact with it on your terms, you turn noise into structure.

Start simple define bias from higher timeframes, mark key liquidity zones, refine with fair value gaps, set trigger conditions, and respect timing and risk. As you collect data and screenshots, your execution model will evolve into a personal edge built around how you actually see the market.

To master liquidity zones, execution models and smart money trading on XAUUSD and other markets, explore the strategies, breakdowns and training available at Liquidity By Murshid.