Liquidity Playbook

Built For

Instruments: Futures/Forex/Crypto
Trading Style: Day Trading

Playbook Overview

This strategy is built around the idea that price seeks liquidity, and that retail traders often get trapped around key highs and lows. Instead of entering trades before price hits liquidity, this playbook waits for the market to run stops (take liquidity) and then trade the reversal after the trap is formed.

 The concept is simple: buy below lows, sell above highs, but only when those lows or highs have respected structure and moved away, forming clear resting liquidity. The key is to use liquidity to determine direction, entry, invalidation, and targets.

Playbook Rules

Directional Bias

• Use liquidity to determine bias. If a high is respected and price moves away, there’s liquidity above it. That suggests the market may return there eventually.
  
• Don’t trade unless liquidity is built. Wait until the price has taken liquidity or formed an inducement before planning a trade.
  
• If a big move has already happened and left no clear highs/lows with liquidity, there is no trade.
  

Buy Setup Rules

1. Identify a low that was respected and caused the price to move away (creates liquidity below).
   
2. Wait for the price to return and trade below that low.
   
3. Look for confirmation (internal structure, false reaction, trap).
   
4. Buy below the low — never above.
   
5. Place a stop-loss below the low that just got taken.
   
6. Target liquidity at highs, especially highs that were respected and moved the price.
   

Sell Setup Rules

1. Identify a high that was respected and caused the price to move away (creates liquidity above).
   
2. Wait for the price to return and trade above that high.
   
3. Look for confirmation (internal structure, false reaction, trap).
   
4. Sell above the high, never below.
   
5. Place a stop-loss above the high that just got taken.
   
6. Target liquidity at lows, especially lows that were respected and moved the price.
   

Execution

• Execute after liquidity is taken, not before.
  
• Use market execution once the high/low is taken and the trap is confirmed.
  
• Always cover the last high/low with your stop.
  
• Don’t refine entries too much; keep it simple.
  

Management

• Only move your stop after price moves in your favor and forms a higher low or lower high.
  
• No break-even stops unless partials have been taken.
  
• Don’t take partials at arbitrary R-multiples. Take them only at actual liquidity targets (internal or external).
  
• Let trades run to meaningful areas, don’t cut trades early unless your system says so.
  

Timing

• Have a specific session window (e.g. New York Open).
  
• If your setup doesn’t form in that window, no trade.
  
• Ignore price action outside your session. You only care about what happens inside your time window.

Pros and Cons of the Strategy

This playbook is designed to deliver high-quality, repeatable setups — but like any trading strategy, there are key things to understand before using it.

Note: The cons listed here aren’t disadvantages. They are things to be aware of — important characteristics that require patience, discipline, and proper management to make the strategy work effectively.

Pros

• Clear Direction: Liquidity gives structure, bias, and direction without relying on complicated indicators.
  
• Simple and Logical: No over-complication, just reading highs, lows, and reactions.
  
• Fractal: Works on all timeframes; the same model applies whether you’re trading 1-minute or daily charts.
  
• Strict Rules: Clear structure for entries, stops, targets, and invalidation.
  
• Eliminates Noise: Avoids false setups and reactions by waiting for liquidity to get taken.
  
• Fits Any Asset: Works across markets (futures, forex, crypto, etc.).
  
• No Indicators Needed: Entirely price-action based, just using raw highs/lows and time.
  

Cons

• Requires Patience: Often, you have to wait hours or days for the setup to complete. Most traders struggle with this.
  
• You Might Miss Moves: If the price moves without taking liquidity, you skip the trade.
  
• Precision Needed: Must train your eye to see liquidity and traps. This takes time.
  
• Hard to Unlearn Old Methods: Many struggle to let go of retail concepts like BOS, OB, FVG, etc.
  
• Not Every High/Low Has Liquidity: You have to judge context properly. Structure alone isn’t enough.
  

Trade Breakdown

Higher Timeframe Context – 30-Minute Chart

To start the day, the focus was on the 30-minute chart. Price had formed equal lows, meaning multiple lows sitting at the same level. These were likely holding sell-side liquidity, so that area was marked as the target for any short setups.

Pre-New York Price Action

Before the New York open, the price had a bullish move up. During that move, a swing high formed that caused the price to reject and pull back. That high got respected — price didn’t break above it right away — so it became an important level.

This high was marked because liquidity was likely sitting above it.

Set up Forms on the 5-Minute Chart (During NY Open)

Once the New York session opened, the price started moving back toward the high from earlier.

On the 5-minute chart, price ran the high, pushing just above it and triggering stop losses or breakout entries.

But right after the break, the price rejected back below the level. It failed to continue higher, a clear sign of a liquidity grab.

Entry

A short was entered right after the rejection, once the price moved back below the high that had just been taken.

There was no trade before the level was run. The entry came after the trap was confirmed.

Stop Loss

The stop loss was placed just above the swing high that had been taken out. This was a clean structural stop. If the price moved above it again, the trade idea would be invalid

Target

The target was the equal lows marked earlier on the 30-minute chart. These were the liquidity resting below, and the price was likely to move toward them once the trap confirmed.