Liquidity Grab Strategy: Trading the Stop Hunt

Understanding Liquidity Grabs

A liquidity grab (also called a stop hunt) occurs when price briefly spikes through a key level to trigger stop losses, then quickly reverses in the opposite direction. This is not random market noise—it's a deliberate institutional strategy to fill large orders at favorable prices.

Institutions need liquidity to execute their massive orders. When they want to buy, they need sellers. When they want to sell, they need buyers. The easiest way to create this liquidity is to push price to levels where retail traders have placed their stop losses, trigger those stops, and use that liquidity to fill their orders.

Where Liquidity Grabs Occur

Institutions target specific levels where they know retail stop losses are clustered. Learning to identify these liquidity pools is the first step in trading liquidity grabs.

Common Liquidity Pool Locations

• Equal Highs/Lows: When price forms multiple swing points at the same level, stops cluster just beyond
• Previous Day/Week Highs and Lows: Retail traders place stops beyond these obvious levels
• Round Numbers: Psychological levels like 1.1000, 1.2000, 100.00 attract stop placement
• Trendlines: Stops are placed just beyond trendlines, making them prime targets
• Moving Averages: Popular MAs (50, 100, 200) often have stops clustered nearby
• Previous Session Highs/Lows: Asian session highs/lows are frequently grabbed at London open

Anatomy of a Liquidity Grab

Understanding the structure of a liquidity grab helps you identify them in real-time and position yourself for the reversal.

Phase 1: The Setup

Price approaches a key level where stops are clustered. This could be previous highs/lows, equal highs/lows, or round numbers. The market may consolidate near this level, building anticipation.

Phase 2: The Grab

Price spikes through the key level, often with a long wick or series of quick candles. This triggers stop losses and creates the liquidity institutions need. The move is typically fast and aggressive.

Phase 3: The Reversal

After grabbing liquidity, price quickly reverses direction. This reversal is often sharp and decisive, with strong candles in the opposite direction. The level that was broken now acts as support/resistance from the other side.

Phase 4: The Follow-Through

Price continues moving in the reversal direction, often traveling to the opposite side of the range or to the next major liquidity pool. This is where CRT traders make their profits.

The Liquidity Grab Trading Strategy

Now that you understand what liquidity grabs are and where they occur, let's cover the exact strategy for trading them.

Session-Specific Liquidity Grab Patterns

London Open Liquidity Grab

The most reliable liquidity grab occurs at London open (3:00 AM EST). Price frequently spikes to take out Asian session highs or lows in the first 15-30 minutes, then reverses sharply to establish the London session bias.

New York Open Liquidity Grab

New York open (8:00 AM EST) often sees liquidity grabs at London session highs/lows or previous day highs/lows. This grab either confirms or reverses the London session bias.

Advanced Liquidity Grab Concepts

Double Liquidity Grabs

Sometimes institutions grab liquidity on both sides of the range before establishing direction. Price spikes up to grab buy-side liquidity, reverses down to grab sell-side liquidity, then makes the real move. These are trickier to trade but offer excellent opportunities if you wait for the second grab.

Liquidity Grab + Order Block Combo

The highest probability setups occur when a liquidity grab reverses into a key order block. After grabbing liquidity, price returns to an institutional order block where more orders are waiting. This creates a powerful confluence for entries.

Fair Value Gap After Liquidity Grab

Strong liquidity grab reversals often create fair value gaps (imbalances) as price moves aggressively away from the grabbed level. These FVGs can be used as additional entry points if you miss the initial reversal.

Common Liquidity Grab Mistakes

Conclusion: Profit from Institutional Manipulation

Liquidity grabs are not market manipulation in the illegal sense—they're simply how large institutions operate in the market. By understanding this reality and learning to identify these patterns, you can position yourself on the right side of institutional order flow.

The key is patience. Wait for the grab to occur, wait for strong reversal confirmation, and then enter with confidence. Use tight stops and let the trade run to significant targets. Liquidity grab trading offers some of the best risk-reward ratios in CRT trading.

Start by focusing on London and New York session opens, where liquidity grabs are most reliable. Mark your key levels before the session, watch for the grab, and be ready to act when the reversal confirms. With practice, you'll develop an eye for these setups and they'll become one of your most profitable strategies.