Liquidity Grabs

Identification Rules

How to spot liquidity grabs on price charts and the key characteristics that define them.

  • Price approaches a key liquidity level (BSL or SSL)
  • Single candle breaks beyond the liquidity level with a large wick
  • Candle has small body and large wick (similar to Doji pattern)
  • Quick rejection back from the liquidity level within same candle
  • For bullish: long bottom wick at SSL level
  • For bearish: long top wick at BSL level

Entry Rules

Optimal timing and entry points after a liquidity grab occurs.

  • Wait for liquidity grab confirmation candle to close
  • Look for retracement to Fair Value Gap for entry
  • Enter in direction of liquidity grab bias

Stop Rules

Where to place protective stops to limit risk when trading liquidity grabs.

  • Place stop beyond the liquidity grab level
  • For FVG entries, place stop beyond the gap

Target Rules

How to set profit targets and exit strategies for liquidity grab trades.

  • Target 1:2 risk-to-reward ratio minimum
  • Look for opposite liquidity levels as targets
  • Consider previous swing highs/lows as profit targets

Confluence Factors

Additional market conditions that increase the probability of successful trades.

  • Fair Value Gaps for entry refinement
  • Higher timeframe bias alignment
  • Multiple liquidity levels at same area
  • Previous day/week/month levels
  • Order blocks near liquidity levels

Failure Modes

Common scenarios where liquidity grab setups don't work as expected.

  • False liquidity grab
  • Weak follow-through
  • Multiple grabs at same level

Common Mistakes

Frequent trading errors when using this pattern and how to avoid them.

  • Entering immediately on wick formation
  • Confusing liquidity grabs with liquidity sweeps
  • Ignoring higher timeframe context
  • Trading against strong trend