Discussing the article: "The Liquidity Grab Trading Strategy"

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Check out the new article: The Liquidity Grab Trading Strategy.

The liquidity grab trading strategy is a key component of Smart Money Concepts (SMC), which seeks to identify and exploit the actions of institutional players in the market. It involves targeting areas of high liquidity, such as support or resistance zones, where large orders can trigger price movements before the market resumes its trend. This article explains the concept of liquidity grab in detail and outlines the development process of the liquidity grab trading strategy Expert Advisor in MQL5.

Market manipulation involves intentionally influencing a security’s price or volume to create misleading trading conditions. While most institutional traders adhere to legal and ethical standards, some may engage in manipulative practices to achieve specific strategic goals. Here’s a concise overview of why and how this occurs:

Motivations:

  • Maximize profits through short-term price moves and arbitrage.
  • Conceal trading intentions from competitors.
  • Execute large trades with minimal market impact.

Tactics:

  • Triggering stop-losses to create liquidity or push prices.
  • Controlling order flow with iceberg orders or spoofing.
  • Targeting support, resistance, or psychological price levels.

Understanding these dynamics allows traders to anticipate institutional behavior and integrate these insights into automated tools for more effective strategies.

We want to capitalize on temporary price movements caused by the accumulation of stop-loss orders and large market participants' actions. By identifying areas of liquidity, traders aim to enter the market at optimal points before the price reverses and continues in the prevailing trend, offering favorable risk-to-reward opportunities.

Here is a rough diagram of what it should look like.

example diagram

Author: Zhuo Kai Chen

 
Thanks for the code , very nicely written article and nicely put together, the code is very helpful thank you . Interesting if you see the SMC traders in social media the returns very different . Will review the transactions and try a trailing stop and a trailing tp or some Fibonacci on the external ranges
 
linfo2 #:
Thanks for the code , very nicely written article and nicely put together, the code is very helpful thank you . Interesting if you see the SMC traders in social media the returns very different . Will review the transactions and try a trailing stop and a trailing tp or some Fibonacci on the external ranges

Thanks for your comment! Yes, I do see the SMC traders in social media. Generally, I think they don't really agree on the strategy in terms of liquidity grab. Some look for two fakeouts instead of one, and some look at trading volume. Overall their actions involve some discretions from themselves which make them hard to evaluate the validity of their strategies. Nevertheless, I look forward to your result experimenting with trailing sl/tp and Fibonacci ranges.

 
This concept looks fresh to me, thanks for sharing.
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