Sign in
EN
EN
ENLiquidity Grab in Trading
The Game of Major Investors
What is Liquidity Grab?
Liquidity Grab is a move or manipulation by large players to deliberately push the price into a specific area, known as a Liquidity Zone, with the goal of accumulating as many trading orders as possible (whether stop-loss orders or entry orders). This provides them with huge liquidity to execute their large trades before the price direction reverses.
When large traders or large institutions begin to grab liquidity (entering to execute their trades), they are called ”Smart Money,” and their goal is to grab or hunt the orders of smaller, retail traders in the market.
What are Liquidity Zones?
Liquidity Zones are the most important order concentration areas on the chart. This is where most regular traders expect the price to rebound, so they place a large number of pending buy or sell orders. Smart Money, in turn, seeks to reach these areas, which typically form around key support and resistance levels.
How It Works
Bearish Grab (Capturing Buy Orders to Push Price Down)
Let’s assume a support level is clearly visible on the chart in a bull market.
Most traders who bought the stock place Stop-Loss orders directly below this level to avoid a large loss.
This is where Smart Money comes in, entering and deliberately pushing the price below the support level to activate those stop-loss orders.
When the price reaches the Stop-Loss order area, all those orders are automatically triggered and converted into sell orders, causing sudden selling pressure. This achieves the goal of Smart Money (large investors), who then enter with buy orders in huge quantities but at low prices, leading to a reversal of the price direction upwards.
Bullish Grab (Capturing Sell Orders to Push Price Up)
Let’s assume the price breaks a resistance level.
The majority of traders who opened short-term sell positions place their stop-loss orders directly above the resistance level.
Large investors enter here and push the price above the resistance level to activate the stop-loss orders.
When the price reaches the stop-loss order area, the orders are automatically triggered and converted into buy orders. Large investors exploit this liquidity and sell at higher prices, which leads to a reversal of the price direction downwards.
How to Spot Liquidity Grab?
To identify a ”Liquidity Grab” on the chart, look for the following candlestick pattern at a key price level:
When the price approaches a significant level, such as the previous day’s low or a strong support or resistance level:
A candlestick quickly drops below that level to trigger stop-loss orders, then quickly bounces back before closing.
The part of the candlestick where the price reached and bounced back quickly is called the wick or tail, and it is long.
The part where the candle closed is called the body, and it is small. The final shape of the candle is similar to a Dragonfly Doji.
The long tail of the candle indicates strong pressure in the opposite direction, but buyers or sellers quickly entered and reversed the movement. When the candle closes, it signals that the liquidity grab has occurred.
To Identify Bullish Liquidity Grab(Grabbing Sell Orders)
Monitor Sell-Side Liquidity levels (SSL): These are areas where traders anticipate support and place stop-loss orders (sell orders) below them.
Once the price drops to the sell level, look for a candlestick that drops below this SSL level to trigger stop-loss (sell) orders, then quickly rebounds before closing.
Make sure this candle has a long lower tail or wick and a small body, similar to a Dragonfly Doji.
The long tail indicates that buyers entered the market aggressively after grabbing sellers’ liquidity.
Now, look for buy positions (Long).
To Identify Bearish Liquidity Grab (Grabbing Buy Orders)
Monitor Buy-Side Liquidity levels (BSL): These are areas where traders anticipate resistance and place stop-loss orders (buy orders) above them.
Once you notice the price quickly rising to the buy level, look for a candlestick that breaks this BSL level to trigger stop-loss (buy) orders, then rebounds strongly and quickly downwards before closing.
Make sure this candle has a long upper tail or wick and a small body, similar to a Gravestone Doji.
The long tail indicates that sellers entered the market aggressively after grabbing buyers’ liquidity.
Now, look for short positions (Short).
How to Trade Liquidity Grab
After Smart Money enters to grab liquidity, this signals an imminent market reversal, which presents a good opportunity for you as a trader to join them. All you have to do is identify the trend:
If the liquidity grab is bullish (at the SSL level), look for buy trades (Long).
If the liquidity grab is bearish (at the BSL level), look for sell trades (Short).
Example of a Buy Trade (Long)
In this example, we observe both a Liquidity Grab and a Fair Value Gap (FVG).
*The concept of Fair Value Gap (FVG) is an area left empty between candles during a strong price movement.
By combining Grab + FVG:
Notice a bullish liquidity grab (at the green circle). This means Smart Money has gained control and sellers were hunted. Based on this, you should look for a buy position.
After the grab, the price rises quickly and strongly, leaving an empty area behind the candles, which is the bullish Fair Value Gap.
What you should do here is wait until the price re-tests this gap. This is the best entry point to open a buy position. For the Stop-Loss, you can place it just below the gap. Set your Take-Profit at a good Risk-to-Reward ratio, such as 1:2 or higher.
Example of a Sell Trade (Short)
Notice a bearish liquidity grab (at the red circle). This means Smart Money has gained control and buyers were hunted. Based on this, you should look for a sell position.
After the grab, the price drops quickly and strongly, leaving a bearish Fair Value Gap (the empty area between the candles).
What you should do here is wait until the price re-tests this gap. This is the best entry point to open a short-sell position. For the Stop-Loss, place it just above the gap. Set your Take-Profit at a good Risk-to-Reward ratio, such as 1:2 or higher.
Liquidity Grab vs. Liquidity Sweep
Both are Grabs of orders from smaller traders by larger players, but the difference lies in speed, duration, and the number of candles involved.
| Feature | Liquidity Grab | Liquidity Sweep |
| Speed | Very fast | Slower |
| Number of Candles | Consists of one candle with a long wick | Consists of multiple candles |
| Duration/Depth | Simple and limited break, followed by a quick reversal | Deeper and wider break into the liquidity zone, often oscillating before reversing |
What Does Liquidity Grab Tell You?
Liquidity Grab tells you that Smart Money has deliberately started pushing prices into “stop-loss” order areas to activate retail traders’ orders. This manipulation leads to a sudden and large wave of orders (either buy or sell). This liquidity allows Smart Money to enter and exit large positions at better prices. These inflows are short-term and are usually followed by a sharp reversal in the price direction. This gives you a potential trading opportunity to benefit from the large price movement that follows this reversal.
In nutshell
Trading with the liquidity grab strategy offers you good opportunities to play alongside the major market players. Make sure you fully understand and master how to identify liquidity zones before engaging in trading alongside “Smart Money,” to ensure your money is trading smartly as well.
You can visit the Naqdi “Education and Analysis“ section to benefit from the visual and readable educational content, where you will find articles and expert insights to improve your trading decisions and performance.
