Advanced Displacement & Imbalance – The Smart Money Concepts Trick Most Traders Miss

Jasper Osita - Market Analyst

2025-08-11 14:32:33

“That Looked Perfect… Until It Didn’t”

Ever had this happen?

You spot the clean displacement. Wide-bodied candles. Structure break. You draw your FVG. You wait for price to come back in.

And then - boom. Price runs through it like it doesn’t even exist.

Here’s the kicker: that wasn’t bad luck. That was a Liquidity Trap Displacement, and you just took the bait.

Today, I’m breaking down how to filter the real from the fake so you can stack your trades with the same moves the smart money is making, not against them.

What Most Traders Get Wrong About Displacement

Everybody can draw a big candle and call it displacement. The difference is:

Beginners think all displacement = continuation.
Pros know displacement is a message - sometimes honest, sometimes a lie.

Your job isn’t to find more setups. Your job is to learn to read intent.

The Two Flavors of Displacement

1. Strong Displacement – The Break Out

Breaks a major liquidity pool (not just a random high/low).
Keeps driving for multiple candles after the break.
Leaves behind an imbalance that gets respected on the return.

2. Liquidity Trap Displacement – The Fake Out

Snaps through a small liquidity level.
Stalls almost instantly.
The FVG gets filled and completely invalidated within the same session.

The 3 Tests to Spot a Real Move

1. Strong Breakout

Like a sprinter blasting out of the blocks, a genuine displacement starts with raw power and doesn’t fizzle out after a few steps.

Fake displacement looks impressive at first - but it’s all flash, no stamina.

Real moves: Smash through a significant liquidity pool or structure level and keep driving without hesitation.
Fake moves: Break a small, local level and stall almost instantly.

If it’s not breaking something important on the map, it’s probably not the run you want to chase.

2. Follow-Through

When institutions are serious, they leave breadcrumbs in the form of stacked FVGs along the move.

Each one acts like a checkpoint - and if price respects those checkpoints on the way back, you know the move has backbone.

✅ Continuation: Multiple layers of imbalances form in the same direction and hold on retests.

❌ Trap: Imbalances are quickly filled and broken, signaling the big players never intended to defend them.

Think of it as footprints in fresh snow. If they lead in one direction and stay undisturbed, you follow. If they suddenly double back, you know something’s up.

3. Breakout Sequence

A true breakout isn’t one candle - it’s a story. Institutions often sequence their moves:

Sweep a liquidity pool to clear the path.
Explode with displacement that breaks a major high or low.
Leave a clean FVG as a re-entry point for them (and you) later.
Control the pullback so price rebalances into the FVG without erasing the breakout.

If the breakout lacks that sequence - if it just spikes and collapses - you’re looking at a liquidity trap, not institutional commitment.

Here’s the mindset shift: don’t just ask, “Did price break out?” Ask, “Did price break out the way smart money usually does?”

Advanced Moves: The Reversal/Inverse FVG

One of my favorite “pro-only” plays:

Forms against the current bias.
Fills fast.
Acts like a pivot point where institutions flip their position.

If you can spot reversal FVGs in real time, you can ditch bad biases before they wreck your week.

Market Memory – The Secret Weapon

Even after being filled, a high-quality imbalance can become a future reaction zone weeks later.

Why? Because the same players who entered there still have skin in the game - and they’ll defend it.

The Basketball Fake Pass

Think of displacement like a fake pass in basketball.

Retail traders watch the ball (the candle).

Institutions watch the floor space (liquidity zones).

Guess who wins more games?

The Advanced Trading Blueprint

Anchor to Higher Timeframe Bias – H4/Daily order flow is your foundation.
Qualify the Displacement – Pass it through the 3 tests.
Mark the FVG After the Displacement – Signals imbalance
Wait for the Return – Patience until the retest during a high-liquidity session.
Trigger With Precision – Confirmation on Lower Timeframe

Mistakes Even Veterans Make

Overtrusting the first displacement after a range.
Ignoring reversal FVGs because “trend bias is set.”
Trading stale imbalances without re-checking higher timeframe.
Assuming all displacement is continuation.

Final Thoughts – This is Chess, Not Checkers

When you start looking at displacement and imbalance as messages instead of signals, you stop being the one who gets trapped.

The market will always throw fakes - but now you’ll see the setup coming, not the stop-out.

Start Practicing with Confidence - Risk-Free!

Open a free demo account today and experience institutional-grade spreads, lightning-fast execution, and all the tools you need to grow as a trader.

Trade forex, indices, gold, and more
Access ACY, MT4, MT5, & Copy Trading Platforms
Practice with zero risk

It’s time to go from theory to execution - risk-free.

Create an Account. Start Your Free Demo!

Check Out My Contents:

Follow me for more daily market insights!

Jasper Osita - LinkedIn - FXStreet - YouTube

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

autor

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

Try These Next

4 Powerful Tactics to Overcome the Most Costly Forex Mistakes

How to Master MT4 & MT5 - Tips and Tricks for Traders

The Importance of Fundamental Analysis in Forex Trading

Forex Leverage Explained: Mastering Forex Leverage in Trading & Controlling Margin

The Importance of Liquidity in Forex: A Beginner's Guide

Close All Metatrader Script: Maximise Your Trading Efficiency and Reduce Stress

Best Currency Pairs To Trade in 2025

Forex Trading Hours: Finding the Best Times to Trade FX

MetaTrader Expert Advisor - The Benefits of Algorithmic Trading and Forex EAs

Top 5 Candlestick Trading Formations Every Trader Must Know

Los precios son solo indicativos

Advanced Displacement & Imbalance – The Smart Money Concepts Trick Most Traders Miss

“That Looked Perfect… Until It Didn’t”

What Most Traders Get Wrong About Displacement

The Two Flavors of Displacement

1. Strong Displacement – The Break Out

2. Liquidity Trap Displacement – The Fake Out

The 3 Tests to Spot a Real Move

1. Strong Breakout

2. Follow-Through

3. Breakout Sequence

Advanced Moves: The Reversal/Inverse FVG

Market Memory – The Secret Weapon

The Basketball Fake Pass

The Advanced Trading Blueprint

Mistakes Even Veterans Make

Final Thoughts – This is Chess, Not Checkers

Start Practicing with Confidence - Risk-Free!

Check Out My Contents:

Strategies That You Can Use

Indicators / Tools for Trading

How To Trade News

Learn How to Trade US Indices

How to Start Trading Gold

How to Trade Japanese Candlesticks

How to Start Day Trading

Learn how to navigate yourself in times of turmoil

Want to learn how to trade like the Smart Money?

Trading Psychology and Continuous Improvement Contents