If you’ve ever been “stop-hunted” — where the market moves just enough to trigger your stop-loss before rocketing in your intended direction — you weren’t just unlucky. You were the victim of a liquidity hunt.

Most retail traders think they’re playing a game of patterns and indicators. However, the real game, played by banks and large institutions (“smart money”), is a game of liquidity.

Liquidity is the fuel that moves the market. It’s the vast pool of buy and sell orders at any given price level, with the largest pools being the stop-loss orders of retail traders. Smart money knows where you place your stops, and they actively push the price to these levels to trigger them, which allows them to fill their massive orders.

This article is a deep dive into the 5 most common ways trading liquidity is used to trap the unsuspecting. Understanding this is the first step in moving from a retail mindset to a professional one.

1. Liquidity Pools & Zones

First, you need to understand where the traps are set. Liquidity pools are predictable areas where a high volume of stop-loss orders accumulates.