Smart Money Liquidity Grabs (6/6)

Notes:

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How they form

Liquidity Grabs form due to whales and big institutions placing very large orders, so they artificially increase or decrease price rapidly to fill their orders as well as getting in at a better value. They usually form when the price is very close to a support or resistance. So for example when the people expect a bounce, they place their stop losses under the area of confluence. These hedge funds end up manipulating the market which makes the people panic buy or panic sell.

How to identify Fair Value Gaps

You can spot them if when in a ranging market (not a lot of movement), there is a sudden increase or decrease in price. Always pay attention to try and not get roped in to the ones in these examples shown below:

How to trade

For a trading strategy using these liquidity grabs, wait for the pump or dump to finish its move and then enter your trade in the opposite direction that the candle was going. For example if there was a massive pump wait for the momentum to finish and the candle to close then enter the trade in the opposite direction (in this case a short)