Liquidity Raids to Enter Trades in ICT: [Get In Before the Move]

In ICT (Inner Circle Trader) strategies, liquidity raids are powerful setups that help traders enter trades with institutional alignment by capturing moves engineered to gather liquidity.

Smart money or institutional traders create these liquidity raids by pushing prices to specific levels where stop orders and pending orders are placed by retail traders.

Once these orders are triggered, liquidity is generated, allowing smart money to enter or exit trades more effectively.

Let’s explore what liquidity raids are, how they work, and how you can use them to enter high-probability trades in ICT.


1. What Is a Liquidity Raid in ICT?

Liquidity Raids and Stop Hunts in ICT
Liquidity Raids and Stop Hunts in ICT

A liquidity raid is a price movement where institutions manipulate price to capture liquidity around key areas like support and resistance levels, recent highs, or lows.

These levels are significant because retail traders tend to place stop-loss orders there, assuming that price will continue in its current direction without reaching those points.

When these levels are triggered, they provide ample liquidity for smart money to enter or exit larger positions.


2. Why Do Liquidity Raids Work ICT ?

Liquidity raids work because retail traders tend to place stop-loss orders in predictable areas like:

  • Above resistance or recent highs (for short trades)
  • Below support or recent lows (for long trades)

Smart money knows these areas and drives price toward them, triggering retail stops and generating liquidity.

They then reverse the price after this liquidity sweep, positioning themselves in the opposite direction of the retail trades.


3. Types of Liquidity Raids in ICT

Liquidity Grabs in ICT
Liquidity Grabs in ICT

Liquidity raids can appear in various forms, but the most common are:

  1. Stop Hunts: Triggering stops at obvious support and resistance levels.
  2. False Breakouts: Temporarily breaking a key level only to reverse sharply.
  3. Sweeps of Key Highs and Lows: Running above a high or below a low to capture liquidity before reversing.

4. Identifying Liquidity Raids in ICT

1. Key Characteristics of a Liquidity Raid:

  • Sharp Move to a Key Level: Price moves quickly to a significant level (e.g., recent high/low).
  • Wicks Beyond the Level: Candles that extend just past a level and then quickly reverse.
  • Quick Reversal: Price reverses direction shortly after breaking the level.
  • Volume Spike: Increased volume, showing that many orders have been triggered.

5. Example: Liquidity Raid on a High

Buy-Side Liquidity in ICT
Buy-Side Liquidity in ICT

Let’s say the EUR/USD pair has been in a sideways range with recent highs at 1.1000 and lows at 1.0950.

Retail traders see this range and place stop-loss orders just above 1.1000, expecting it to act as resistance.

Smart money, observing these stops, pushes the price slightly above 1.1000 to trigger stop orders.

This brief breakout gathers liquidity, allowing institutional traders to place sell orders at 1.1005.

After the stops are triggered and liquidity is collected, the price reverses sharply, and EUR/USD moves back down, trapping retail traders who entered late on the breakout.

How to Trade This:

  • Wait for Confirmation of Reversal: Avoid entering immediately after the level breaks. Instead, wait for price to show signs of a reversal (like a bearish candle at a high).
  • Enter on the Reversal: Once you see confirmation (e.g., a bearish engulfing candle), enter short.
  • Place Your Stop Above the Wick: This prevents getting stopped out in case of minor fluctuations.

6. Example: Liquidity Raid on a Low

Sell-Side Liquidity in ICT
Sell-Side Liquidity in ICT

Imagine GBP/USD has been trending upward but recently retraced to a support level around 1.3000.

Retail traders place stop-loss orders just below this level, assuming it will hold.

Smart money drives the price below 1.3000, triggering these stops, before quickly reversing back up.

This liquidity grab provides an ideal entry for institutional traders to go long at a favorable price.

How to Trade This:

  • Look for Reversal Signs at the Low: Once the level is breached, observe if there’s a strong bullish candle showing a reversal.
  • Enter on Confirmation of Reversal: Enter long once the price starts moving back up with momentum.
  • Stop Below the Recent Low: Keep your stop-loss just below the low to avoid getting stopped out on minor moves.

7. Using Liquidity Raids in Conjunction with ICT Market Structure

Liquidity raids become even more powerful when aligned with ICT market structure concepts such as order blocks and break of structure (BOS).

1. Order Blocks:

A raid often ends in an order block, where smart money accumulates or distributes.

If a liquidity raid reverses near an order block, it’s a stronger signal for entry.

Example: If a liquidity raid occurs at a low near a bullish order block, it’s a strong buy signal.

2. Break of Structure (BOS):

A BOS following a liquidity raid is a confirmation that the raid has led to a change in direction, and the market is likely to move in the opposite direction.

Example: If price raids a high, reverses, and then breaks the previous support, it signals a bearish trend is forming.


8. Strategies to Trade Liquidity Raids in ICT

SMC ICT Liquidity Traps Explained
SMC ICT Liquidity Traps Explained

A. Pre-Raid Setup:

  1. Identify Key Levels: Determine key support and resistance levels or recent highs/lows where liquidity may be pooled.
  2. Wait for Price to Raid These Levels: Observe if price moves to these levels in a sharp, impulsive way.
  3. Confirm Reversal with Price Action: Look for signs of rejection, such as a pin bar or engulfing candle.

B. Post-Raid Confirmation:

  1. Enter After Reversal Confirmation: Once the raid is complete, wait for confirmation that the price will reverse.
  2. Set Stop-Loss Beyond the Raid Wick: Place your stop just above/below the wick that formed during the raid to avoid getting stopped out.

9. Real-Life Scenario of a Liquidity Raid Setup

Consider the USD/JPY pair. Suppose the price has been consolidating with a recent high at 145.00, and retail traders place sell orders expecting the level to hold.

  1. Smart money pushes the price above 145.00, triggering sell stops.
  2. The price creates a wick above 145.00 and reverses sharply.
  3. This liquidity raid absorbs sell orders, allowing smart money to enter a large short position.
  4. The price then falls, and you enter short once the reversal is confirmed with a stop just above the wick.

10. Benefits of Trading Liquidity Raids in ICT

  • Trade with Institutional Flow: Liquidity raids allow traders to follow institutional strategies, entering trades where smart money is active.
  • Avoid Retail Traps: By waiting for liquidity raids to play out, you avoid entering positions where retail traders are often trapped.
  • Enhanced Probability: Liquidity raids at key levels improve trade probability by leveraging areas of institutional interest.

11. Conclusion

Using liquidity raids effectively in ICT trading requires patience and an understanding of how smart money targets retail positions.

By focusing on key levels, waiting for the raid and confirmation of reversal, traders can enter trades aligned with institutional momentum, reducing the chance of falling into retail traps.

Recognizing liquidity raids enables you to trade alongside smart money, taking advantage of retail liquidity to enter trades with strong potential for profit.


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