Turtle Soup is an ICT strategy, primarily used after the formation of range-bound price movements, which constitute most of the market's behavior. This strategy combines several key concepts:Order Block, Fair Value Gap (FVG), Fake Breakout, and Liquidity Sweep.
What Is the Turtle Soup Strategy?
The Turtle Soup Strategy is a trading method designed to hunt liquidity in the market and capitalize on reversal points. This strategy is typically applied when the price exits a range or liquidity zones, aiming to attract more orders.
Note: To simplify the identification of the Turtle Soup setup, the [TFlab] team has developed and indicator for it:
- Turtle Soup Indicator for MetaTrader 4;
- Turtle Soup Indicator for MetaTrader 5;
- Turtle Soup Indicator for TradingView.
Why Does the Turtle Soup Strategy Focus on Liquidity?
Markets naturally gravitate toward areas with concentrated liquidity. In the Turtle Soup Strategy, two types of liquidity are emphasized:
- Internal Liquidity: Found within short-term range areas, consisting of Fair Value Gaps or short-term highs/lows;
- External Liquidity: Found outside the short-term range, including stop-losses or other imbalance zones.
First of all, price absorbs internal liquidity before moving to target external liquidity, aligning with the overall higher-timeframe trend.
How Does the Turtle Soup Strategy Work?
To apply this strategy, follow these prioritized steps:
#1 Identify the Range
The range is defined between a specific high and low on the chart, where older highs and lows act as zones of significant liquidity.
#2 Identify Entry Points
- Uptrend: Price should absorb lower liquidity (Swing Lows) before moving upward;
- Downtrend: Price hunts higher liquidity (Swing Highs) before moving downward.
#3 Align with the Higher Timeframe
Review the market direction in higher timeframes (daily or hourly) to ensure alignment. In lower timeframes, wait for the price to return and reach key areas like Order Blocks.
Pros and Cons of the Turtle Soup Strategy
Like any trading strategy, Turtle Soup has its specific advantages and disadvantages:
Advantages | Disadvantages |
Clear identification of liquidity points | Requires patience for price to reach key zones |
Usable across different timeframes | Demands understanding of liquidity and market behavior |
Higher-timeframe analysis ensures alignment | Risk of misidentifying all components |
Practical Steps for Using the Strategy
- Analyze the Higher Timeframe: Identify external liquidity points and mark them clearly on the chart;
- Define the Range: Mark highs and lows within a price range to distinguish internal and external liquidity;
- Wait for Internal Liquidity to Be Hunted: Once internal liquidity is absorbed, look for moves toward external liquidity.
- Enter the Position: After observing the confirmation of a reversal signal in key zones, proceed to enter the position.
Conclusion
The Turtle Soup Strategy is a tool for liquidity hunting and utilizing confirmed directional moves in higher timeframes.
This strategy is particularly suitable for traders seeking clear market movements. Mastery in liquidity concepts and synchronization across timeframes is essential for success in this method.
