The ‘Invisible’ Forex Market: Understanding Liquidity, Order Blocks, and Price Action

Most of what moves the forex market isn’t visible on your screen.

When I first started trading, I’d stare at my charts, convinced that a clean support/resistance line was enough to predict what came next. Sometimes it worked — until it didn’t. Price would “wick” me out, then fly in my direction. Or it would break a level, only to reverse violently seconds later.

Sound familiar?

What I didn’t know then — and what too many retail traders still miss — is that there’s an entire invisible layer to the market: liquidity, order flow, and the role of institutional players. Understanding how these forces work helped me stop fighting the market and start flowing with it.

In this article, we’ll break down the underlying mechanics of how price really moves — from liquidity grabs to order blocks — and how you can use these insights to trade smarter, not harder.

Most retail traders look for patterns. Institutions? They look for liquidity.

Liquidity is simply where orders are stacked. Market makers and large players can’t enter a full position without moving the market against themselves — they need your stop loss, your breakout entry, your fear. So, they target areas where retail traders have predictable behaviour.

Think:

• Below swing lows (sell-side liquidity)

• Above resistance zones (buy-side liquidity)

• Tight consolidations before a “fake” breakout

These are all liquidity pools, and they often act like magnets for price.

So next time you get wicked out of a trade before it takes off — don’t just blame volatility. Understand that you were likely the liquidity.

You’ve probably seen the term thrown around on YouTube: “Order block this, smart money that.”

But what is an order block, really?

In simple terms, an order block is the last bullish or bearish candle before a significant market move. It’s the footprint of an institution executing a large position.

Why is that useful? Because institutions often return to these zones to fill unexecuted orders. That means:

• Price may react to an order block

• A retest of an order block can offer high-probability entries

• They often align with liquidity zones

If I’m trading a reversal or a continuation setup, I always scan for nearby order blocks. But I don’t treat them like magic rectangles — I look at how price interacts with them.

All of this ties into price action.

I used to think price action was just about pin bars and engulfing candles. But true price action is the story behind the candles. It’s how liquidity, momentum, and structure come together.

When I study price action now, I ask:

• Where is liquidity sitting?

• Did price sweep that liquidity and reverse?

• Are we reacting to an order block, or breaking through it?

• Is structure shifting in favour of buyers or sellers?

This approach changed everything for me. It’s not about finding the “perfect pattern” — it’s about understanding what the market wants, and aligning with it.

Let me break it down into a real example:

1. I identify equal highs near a resistance zone — this is where retail traders are likely placing shorts and stops.

2. I spot an order block just above that level.

3. I wait for a liquidity grab — price spikes above the highs, hits the order block, then reverses.

4. I enter on confirmation — maybe a market structure shift or bearish engulfing candle, with tight risk.

This gives me context, not just a setup. I understand who’s likely being hunted — and I position myself on the side of the hunters, not the hunted.

At Space Markets, I’ve got the right tools — fast execution, tight spreads, and reliability. But tools don’t replace understanding.

By seeing beyond what’s on the screen and thinking like a smart money trader, I stopped overtrading, reduced my drawdown, and started trading with conviction.

This market isn’t random — it’s structured around human behaviour and institutional needs.

If you can read between the lines, you’ll stop chasing trades — and start executing with purpose.