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Mastering Trades Using Liquidity Strategies

Mar 17, 2025

Trading Using Liquidity

Introduction

  • Presenter: Fabio
  • Topic: How to take trades using liquidity, identify liquidity, and combine it with supply and demand.

Market Structure Overview

  • Start with an analysis of the overall market structure to determine trade direction (long or short).
  • Current Chart Analysis (NUSD - Daily Timeframe):
    • Market was bullish with a sequence of:
      • Low
      • Higher High
      • Higher Low
      • Higher High
    • Market flipped bearish after a break of structure.
  • Immediate Bias: Look for short positions.

Fractal Structure

  • Identify fractal high and fractal low:
    • Fractal High: Breaks structure.
    • Fractal Low: Follow similar logic.
  • 4-Hour Timeframe Analysis:
    • Confirmed bearish market structure with lower lows and lower highs.
    • Expecting a new lower high followed by a downward push.

Identifying Liquidity

  • Main Forms of Liquidity:
    1. Range Liquidity: Areas of consolidation.
      • Look for liquidity above/below these ranges.
    2. Swing High and Swing Low Liquidity:
      • Expect liquidity above swing highs or below swing lows where stop losses might be placed.
  • Market structure indicates bearish movement on NUSD.

Trading Setup

  • Identifying Range Liquidity:
    • Draw swing high and check for liquidity grabs above it.
    • Confirmed that liquidity was grabbed above the highs before downward movement.
  • Short Position Setup on 15-Minute Timeframe:
    • Identify supply zones and premium vs. discount.
    • Supply Zone identified as an area where strong sell-down occurred, indicating a break in market structure.
  • Confluences for Short Position:
    1. Supply and Demand: Confirmed supply zone.
    2. Premium vs. Discount: Valid retracement into premium above 0.5 FIB.
    3. Liquidity: Grabbed above recent range.
    4. Market Structure: Valid bearish structure across multiple timeframes (daily, 1-hour, 4-hour, 15-minute).

Final Trade Validation

  • Check for swing high/low liquidity before executing a trade.
  • Double Strong Zone:
    • Area of liquidity below a supply zone and liquidity grabbed during formation.
  • Execution:
    • Enter short position with stop loss above high.
    • Target at least a 1:3 risk-to-reward ratio.
  • Trade Outcome: Market pushed down lower as anticipated.

Conclusion

  • Summary: Effective use of liquidity for trade entries can lead to positive outcomes.
  • Encouragement to ask questions or join the Discord community for further learning.

Full transcript