DOMINATING LIQUIDITY: The 4 Institutional Standards that Define Market Direction

[Igor Pereira]

Many traders operate believing that the market moves randomly or purely based on superficial news. However, those who observe the market from within, with the institutional perspective, know that there is an " algorithmic logic" behind each movement.

By Igor Pereira Financial Market Analyst & Junior Member WallStreet NYSE

Today, I bring it to the ExpertFX School an in-depth study of what really moves the price: The search for Liquidity.

We're not talking about "magic setup," we're talking about tracking where smart money needs to go to fill their gigantic orders. Below, I decoded the 4 High Probability Input Models which use institutional concepts to validate operations.

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Big banks and institutions cannot simply "click on buying". Their volume is so large that if they do, the price goes off without filling all orders (slippage). They need a counterpart or a GRAB of Liquidity.

They need you to sell it so they can buy it.

That's why we see "traps" and sudden movements against the trend before the real movement. The templates below (HTF - High Time Frame H1/H4/D1) show exactly how to identify when the "manipulation" is over and the real movement will begin.

You must be wondering., but are these graphic institutional models only for "Bullish/Buy"? No, no, no., the same example should be followed the reverse, the market always "reveria" (Points of Interest (POIs) and FVGs to confirm a trend or reversal, so that it then gives continuity.

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MODEL 1: The Classic Reversion (HTF POI + Shift + FVG)

This is the fundamental model of market reversal. It occurs when the price reaches a Higher Graph Time Interest Point (HTF POI) — as a weekly or daily support.

• The Capture (Liquidity Grab): The market makes a lower fund, sweeping the Stop Loss The retailers who bought it too soon. This generates the necessary liquidity.

• Change (MSS): Soon after capture, the price explodes to the opposite side, breaking the previous structure (previous top). This confirms that the institutional hand has entered.

• The Input (FVG): Aggressive movement leaves a "vacuum" or price imbalance, known as Fair Value Gap (FVG)

• Implementation: We wait for the price to return to this FVG in a discount zone to enter in favor of the new move.

Analyst Insight: If you enter before the liquidity capture (the false fund), you will be liquidity. Patience is the key.

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MODEL 2: The Inducement Trap (IDM + FVG)

This is the model responsible for tracking traders who already know the basics of Smart Money, but are impatient.

Many times, after Market Structure Shift (structure break), the market does not return directly to the source. He creates one Induction (IDM) Or "Inner Liquid."

• The Scenario: The price rises, makes a small retreat (creating a false fund) and rises a little further. The anxious trader sees this retreat as support and purchase.

• The Trap: The institutional algorithm knocks down the price one last time to sweep this "fake fund" (IDM), playing on the real FVG that was below.

• Implementation: Never buy in the first obvious indentation after a structure break if there is an untested FVG right below. The IDM is the final fuel before the actual launch.

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MODEL 3: The Mathematical Precision (OTE + FVG)

High Frequency (HFT) algorithms operate based on discount mathematical logic. They rarely buy at "fair" prices; they want "discounted" prices.

• Logic: This model uses the same base as Model 1, but adds a high precision filter: a OTE (Optimal Trade Entry) .

• The Golden Zone: We plot the Fibonacci retraction from the bottom to the top of the break motion. Institutions plan heavy orders in the area between 62% and 79% Retraction.

• Confluence: When Fair Value Gap (FVG) aligns perfectly within this 62-79% zone, the probability of hit becomes vertical.

Note for XAU/USD: Gold strictly respects the 79% zone before explosive movements.

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MODEL 4: The Box Setup (Accumulation and Manipulation)

Often, the market becomes lateralized, "boring", consolidated in an interval (Box). That's not inactivity; it's accumulation of orders.

• Consolidation: The price gets stuck in a range, inducing traders to operate support and simple resistance.

• The Liquidity Grab: Suddenly, the price breaks aggressively to one side (e.g. down). Retailers sell it thinking it's a breakup. Actually, it's an institutional liquidity capture.

• The Return: The price reverts violently and returns into the box and breaks to the opposite side.

• The Retest: The "retest" of the original consolidation is not only support; it is the banks mitigating their positions for the actual high movement.

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The chart you see on your screen is, in many ways, a narrative built to test your emotional and technical management.

For us, ExpertFX School, understand these 4 models means stop trying to guess the top or the bottom and start reacting to consummated facts:

1. Was there a liquidity grab?

2. Was there a structure break (MSS) (BOS)?

3. Is the price in discount region (OTE)?

Study these diagrams. Save this stuff. The financial market is a transfer of wealth from impatient to patient.

ExpertFX School — Forming the Elite Financial Market.