Profitable Liquidity Targeting Strategy | Forex Factory

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Profitable Liquidity Targeting Strategy

  • #1
  • First Post: Edited May 31, 2024 1:04am May 16, 2024 10:30pm | Edited May 31, 2024 1:04am
Trading is easy. Today, I will share a profitable trading system that you can make your own.
To be profitable, you need two things:

  1. A Target
  2. Execution when the price aligns with your target

Rinse and Repeat.

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1. Setting the Target (4h Chart)
For this strategy, we will draw the External Range of Liquidity (ERL) and Internal Range of Liquidity (IRL) on the Daily and 4h Charts.
What is ERL? ERL refers to the closest swing highs and lows. Above and below these areas, there are clusters of stop-losses and pending orders that banks target.
What is IRL? IRL refers to the Fair Value Gaps found between those ERLs.
What is a Fair Value Gap (FVG)? When banks and major institutions cause the price to move quickly, gaps are created. These gaps are called Fair Value Gaps. The price retraces back to these gaps to offer fair value, either immediately or at a later date.

2. Executing Orders (15m Chart)
To execute orders, we need to ensure that we have one of the following market conditions:

  1. Buy Side Delivery (BSD)
  2. Sell Side Delivery (SSD)

BSD (Buy Side Delivery): Buy side delivery means that the price is breaking higher highs and, at the same time, respecting higher lows at least three times. This indicates a bullish trend in the market.
SSD (Sell Side Delivery): Sell side delivery is the opposite. This is when the price is breaking below lower lows and, at the same time, respecting lower highs at least three times. This indicates a bearish trend in the market.
Precise BUY Entry Rules:

  1. Confirm that the price has a Sell Side Delivery (SSD).
  2. Wait for the price to break above the recent resistance.
  3. When breaking resistance, the price must form a valid order block.
  4. Wait for the price to retrace.
  5. Draw a Fibonacci retracement from the swing low to the swing high, and wait for the price to come back to the golden Fibonacci levels (62-79%).
  6. Wait for the price to confirm rejection from the golden Fibonacci levels.
  7. Place your order.
  8. Set your stop loss below the swing low.
  9. For take profit, target higher time frame target areas (4h chart).

Feel free to ask if you need further clarification or additional details!

My Trading Account growth during May 2024 following this Strategy:

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Keys:
Understanding different entry options. https://www.forexfactory.com/thread/...3#post14873743
Understanding Order Block testing and Price Delivery: https://www.forexfactory.com/thread/...4#post14873994
How to time the market: https://www.forexfactory.com/thread/...1#post14885411
  • #2
  • May 17, 2024 3:31pm May 17, 2024 3:31pm
Could you post some examples of trades with your system?
Only the top photo is still a bit confusing as to the timing and confirmations of the trade.
Thanks for sharing your knowledge: )
  • #3
  • May 17, 2024 4:59pm May 17, 2024 4:59pm
How far do you go back to draw the trendline? Its very subjective and I always have an issue with this. I like the strategy however need some info on drawing lines. i mean yes I see higher highs higher lows etc but the more back you go to the left the current higher high could be a lower high for a past structure. So some details would be good
  • #4
  • May 20, 2024 7:13am May 20, 2024 7:13am
Quoting killervsr
Could you post some examples of trades with your system? Only the top photo is still a bit confusing as to the timing and confirmations of the trade. Thanks for sharing your knowledge: )
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example in EURUSD pair today. The trade is till open and running.
  • #5
  • May 20, 2024 7:22am May 20, 2024 7:22am
Quoting vinesh1
How far do you go back to draw the trendline? Its very subjective and I always have an issue with this. I like the strategy however need some info on drawing lines. i mean yes I see higher highs higher lows etc but the more back you go to the left the current higher high could be a lower high for a past structure. So some details would be good
look at the most recent chart and try to form a symmetric curve.
in 15 minute if there's a valid BSD/SSD, it should begin from the mid point of previous day. dont go beyond that point to form a curve. often you will have a curve
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  • #6
  • May 20, 2024 9:57am May 20, 2024 9:57am
Quoting tiptoptrade
{quote} {image} example in EURUSD pair today. The trade is till open and running.
Interesting. Do we always have to wait for break of structure? Also do we wait for retest of the break or jump in as soon as structure breaks? I also notice you have a horizontal support line to indicate BOS. As far drawing support levels? Does the same rule apply? Previous day's mid point? And all this happening on 15min correct?
  • #7
  • May 20, 2024 11:47am May 20, 2024 11:47am
Quoting vinesh1
{quote} Interesting. Do we always have to wait for break of structure? Also do we wait for retest of the break or jump in as soon as structure breaks? I also notice you have a horizontal support line to indicate BOS. As far drawing support levels? Does the same rule apply? Previous day's mid point? And all this happening on 15min correct?
- always wait for BOS
- yes we must wait for retest/correction to fvg/OB/fibo 62-79
- for a valid BSD, all prev support must not be broken by next support
- prv day mid point is for reference. Structure may form the same day. Just dont go too far. Going far will complicate things
- yes 15m only
  • #8
  • May 20, 2024 11:58am May 20, 2024 11:58am
Quoting tiptoptrade
{quote} - always wait for BOS - yes we must wait for retest/correction to fvg/OB/fibo 62-79 - for a valid BSD, all prev support must not be broken by next support - prv day mid point is for reference. Structure may form the same day. Just dont go too far. Going far will complicate things - yes 15m only
"all prev support must not be broken" - What would you consider a support/resistance. How many touches before it becomes a supp/resistance? And do you draw supp/resis on 4hr or small tf? As for OrderBlocks is it always a large candle? Can it have wicks on both ends? OB is one candle or set of candles? Thanks for responding and clarifying. I have been trading with liquidity and OB's but close out my trades too early cause I don't know where to set target. I don't know if you have time but if you do a zoom session would be awesome.
  • #9
  • May 20, 2024 12:09pm May 20, 2024 12:09pm
In your example where do you draw resistance? I mean it's so subjective what constitutes a valid resistance? What If you say miss the breakout how do you join the trend while the trend is already up or down?
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  • #10
  • May 20, 2024 2:16pm May 20, 2024 2:16pm
Quoting vinesh1
{quote} "all prev support must not be broken" - What would you consider a support/resistance. How many touches before it becomes a supp/resistance? And do you draw supp/resis on 4hr or small tf? As for OrderBlocks is it always a large candle? Can it have wicks on both ends? OB is one candle or set of candles? Thanks for responding and clarifying. I have been trading with liquidity and OB's but close out my trades too early cause I don't know where to set target. I don't know if you have time but if you do a zoom session would be awesome.
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You need to have an eye to figure out the beginning and end of a swing. In between that major swing will have minor supports - disregard those support
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You can make OB as complicated as you want but the most accurate OB is the first candle of FVG
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  • #11
  • May 20, 2024 2:23pm May 20, 2024 2:23pm
Quoting vinesh1
In your example where do you draw resistance? I mean it's so subjective what constitutes a valid resistance? What If you say miss the breakout how do you join the trend while the trend is already up or down? {image}
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valid resistance has any of these following characteristics
- beginning of a major swing
- has a valid OB with fvg
- get respected by the begining point of next major swing
  • #12
  • May 20, 2024 2:38pm May 20, 2024 2:38pm
Quoting vinesh1
In your example where do you draw resistance? I mean it's so subjective what constitutes a valid resistance? What If you say miss the breakout how do you join the trend while the trend is already up or down? {image}
If you have missed the breakout you most likely were busy elsewhere. Dont engage in that case.

When breakout occurs you involve following ways:
- price breaks and creates a Runway OB, runaway OB is simply an engulfer that engulfs full opposite move on the go. Execute orders when such engulfs occur right after breaks
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- when price breaks wait for it to come atleast 50% of fvg and then reject hard
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- most optimal entry is when price retrace in between 62-79 fibo level and reject hard
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  • #13
  • Edited 6:23pm May 20, 2024 3:48pm | Edited 6:23pm
Quoting tiptoptrade
{quote} If you have missed the breakout you most likely were busy elsewhere. Dont engage in that case. When breakout occurs you involve following ways: - price breaks and creates a Runway OB, runaway OB is simply an engulfer that engulfs full opposite move on the go. Execute orders when such engulfs occur right after breaks {image} - when price breaks wait for it to come atleast 50% of fvg and then reject hard {image} - most optimal entry is when price retrace in between 62-79 fibo level and reject hard {image}
You said when price break: When you say break are we talking about break of the high/low and if so by how many pips would you consider a break? You have to account for the spread? What if the break happens that is within the spread? When price does reach OB or FVG box etc. what are you looking for as to where the price is going to go like is going to go up or go down? For example in my pic. There is FVG and say price comes to the point. What are you looking for as far price direction. Are you looking for a break of the FVG (Big red candle) to go up or a rejection once it reaches the bottom of the big red candle. If break does occur and if there is a resistance level nearby how do you account for that? In another example. Price broke 1hr FVG with a good red OB did not retrace much went down maybe around 10pips and went straight back up. Why is that? Just curious to see some scenario's where the FVG/OB does not work
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  • #14
  • May 20, 2024 5:23pm May 20, 2024 5:23pm
Quoting tiptoptrade
Trading is easy. Today, I will share a profitable trading system that you can make your own. To be profitable, you need two things: A Target Execution when the price aligns with your target Rinse and Repeat. {image} 1. Setting the Target (4h Chart) For this strategy, we will draw the External Range of Liquidity (ERL) and Internal Range of Liquidity (IRL) on the Daily and 4h Charts. What is ERL? ERL refers to the closest swing highs and lows. Above and below these areas, there are clusters of stop-losses and pending orders that banks target. What...
The buy trade here was never triggered because never reached 62% Fibs.
This means, as per rule, no entry.
Correct?
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  • #15
  • Edited 7:35pm May 20, 2024 6:57pm | Edited 7:35pm
Quoting Merka
{quote} The buy trade here was never triggered because never reached 62% Fibs. This means, as per rule, no entry. Correct? {image}
There are two fvgs in this example. one is near 62 fibo and another is before the BOS. after BOS:
- price may come back to 50% fibo or 50% fvg and reject
- or price may retrace back to 62-79 fibo level which is optimal.
- price may as well never return past BOS but instead create OB on the go and use it as a new support.

See my reply to questions from vinesh1 for better understanding on different entry options. https://www.forexfactory.com/thread/...3#post14873743
  • #16
  • May 20, 2024 8:00pm May 20, 2024 8:00pm
Quoting vinesh1
{quote} You said when price break: When you say break are we talking about break of the high/low and if so by how many pips would you consider a break? You have to account for the spread? What if the break happens that is within the spread? When price does reach OB or FVG box etc. what are you looking for as to where the price is going to go like is going to go up or go down? For example in my pic. There is FVG and say price comes to the point. What are you looking for as far price direction. Are you looking for a break of the FVG (Big red candle)...
please follow the method. I never mentioned to go to 1hr chart. So please don't ask me questions on other timeframes. Forex is already a complex subject. Abide by the timeframe given which is Daily, and 4h to figure out Target Areas and 15m chart to execute based on the given entry module.

the method is extremely simple. You find out the 4h and daily ERL and IRL. those are your Target for profit taking. Next step is to go to 15m chart and look for BSD/SSD. if not found, skip the day. If found:
- wait for price to break out of those BSD/SSD and align towards your higher timeframe target areas with Valid OB and proper retest. That's it!!

Now the terminology BOS is also simple. When price breaks above previous support/resistance - BOS occurs. Now many times price will go well beyond support but will fail to close beyond. That's a BOS but may or may not be a valid one. That's why you need to look into the size of the BSD/SSD, see for the recent narrow consolidation areas that refers to exhaustion of BSD/SSD. if exhaustion found, a minor candle wick breaking through structure could mean the shift is coming. You need experience like every other successful trader. There's no way we can be profitable just by reading and applying a method.
  • #17
  • May 20, 2024 8:13pm May 20, 2024 8:13pm
Quoting tiptoptrade
{quote} please follow the method. I never mentioned to go to 1hr chart. So please don't ask me questions on other timeframes. Forex is already a complex subject. Abide by the timeframe given which is Daily, and 4h to figure out Target Areas and 15m chart to execute based on the given entry module. the method is extremely simple. You find out the 4h and daily ERL and IRL. those are your Target for profit taking. Next step is to go to 15m chart and look for BSD/SSD. if not found, skip the day. If found: - wait for price to break out of those BSD/SSD...
thank you. I will check this out. Can you please some of my other questions. About action when price reaches fvg/fibo etc. Much appreciated.
  • #18
  • May 20, 2024 9:25pm May 20, 2024 9:25pm
Quoting vinesh1
{quote} You said when price break: When you say break are we talking about break of the high/low and if so by how many pips would you consider a break? You have to account for the spread? What if the break happens that is within the spread? When price does reach OB or FVG box etc. what are you looking for as to where the price is going to go like is going to go up or go down? For example in my pic. There is FVG and say price comes to the point. What are you looking for as far price direction. Are you looking for a break of the FVG (Big red candle)...
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When price has a successful Sell Side (SS) Delivery, it will react on Buy Side (BS) order block like a ship reacts to a destination shipping point. Price usually does any of the followings when it reaches to the Destination OB:
- bounce from upper ceiling of the OB
- Reach to the lowest point of OB and reject
- fully breaks below the OB disrespecting it
- Consolidate in the OB area and either push below to untested OB or reject from it towards newly formed Sell Side OB

How price will react to a OB area depends mostly on the buying/selling pressure. If the pressure is high, it may completely disregard OB and break below. If the force is Okay, it may bounce from the OB or test it before pushing down.

Note: For a successful delivery, price goes from Discount to Premium and breaks through previous Side OB one by one either by respecting it/testing it or completely disrespecting it.
  • #19
  • May 20, 2024 9:31pm May 20, 2024 9:31pm
Quoting tiptoptrade
{quote} {image} When price has a successful Sell Side (SS) Delivery, it will react on Buy Side (BS) order block like a ship reacts to a destination shipping point. Price usually does any of the followings when it reaches to the Destination OB: - bounce from upper ceiling of the OB - Reach to the lowest point of OB and reject - fully breaks below the OB disrespecting it - Consolidate in the OB area and either push below to untested OB or reject from it towards newly formed Sell Side OB How price will react to a OB area depends mostly on the buying/selling...
really good stuff bro. I have to practice this for sure. Would love to see more posts from you. Maybe make a Youtube video. If time permits? Again thank you
  • #20
  • May 21, 2024 10:37am May 21, 2024 10:37am
You mention using the daily and 4 hour chart for target and step one is as below. But I can not see it used anywhere in your examples. - can you make a post with a full setup - where all steps are included.

"Setting the Target (4h Chart)
For this strategy, we will draw the External Range of Liquidity (ERL) and Internal Range of Liquidity (IRL) on the Daily and 4h Charts.
What is ERL? ERL refers to the closest swing highs and lows. Above and below these areas, there are clusters of stop-losses and pending orders that banks target.
What is IRL? IRL refers to the Fair Value Gaps found between those ERLs.
What is a Fair Value Gap (FVG)? When banks and major institutions cause the price to move quickly, gaps are created. These gaps are called Fair Value Gaps. The price retraces back to these gaps to offer fair value, either immediately or at a later date."

The other steps are pretty straight forward - but for me watching your examples - all can be done using the 15 minute chart and using some of the BSD or SSD as targets.
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