When Liquidity Grabs Fail: A Trader’s Opportunity

Structure your trade for the perfect setup.

Check out this 1-minute chart of the Nasdaq:

That arrow identifies what some traders call a “liquidity grab”.

  • The idea is that stops are often triggered under a key level.
  • Price hunts for liquidity and then uses that dip as a springboard backup.

It’s not dissimilar to Wyckoff’s ‘spring pattern’ (Deep dive here.)
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The logic is sound, and in the right place, you can structure some nice RvR trades from the liquidity grab.
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​But what happens when this pattern fails?
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​You and I both know exactly where stops are going to be. Right?
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This is a game of chess, not checkers.
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So go on, before you look at the chart, where are long stops going to be after that liquidity grab?

Yep, they are going to be right under that tail.
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Every single one of them.
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So…
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How can we take advantage of that?
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By getting ready to smash that bid if and when that tail’s low gets breached.

The beauty of this trade is that you can structure it beforehand and be ready if it should trigger.
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You want these things in place.

  1. Support to hold
  2. Classic liquidity grab poke under support
  3. A small rally from that spring
  4. Then a retest of the liquidity grab low

Oh and the right context for a short trade in the first place…
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Simple enough to execute and be ready for, and a nice way to potentially avoid getting pinged on the traditional first breakout trade if you want to be short.
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Might be worth considering for the playbook…