A "Liquidity Hunt" in trading is a strategy used by some traders to exploit the market by looking for areas where there is a low liquidity or a thin market.
The goal is to push prices up or down in order to trigger stop-loss orders or force other traders to buy or sell, which can create a cascade of price movements in the desired direction.
Whale traders may use liquidation points to identify potential market trends. For example, if there are many long positions liquidated at a particular price point, it could be an indication that the market is trending downward. Conversely, if there are many short positions liquidated at a particular price point, it could be an indication that the market is trending upward.
Some traders may intentionally create liquidation points in order to seek liquidity. By placing orders at a particular price point where many traders have set their liquidation points, they can take advantage of the increased trading volume and potentially make profitable trades.
Finally, some big traders may use the knowledge of where other traders have set their liquidation points to their advantage by intentionally triggering liquidations. For example, they may place large sell orders just below a liquidation point for long positions, hoping to trigger those liquidations and drive the price lower, allowing them to buy at a lower price and profit from the price increase when the market rebounds.
Liquidity hunts can be risky and can cause significant volatility in the market, so they require careful planning and execution. Traders who use this strategy must have a good understanding of the market and be able to read market signals to make profitable trades.