In simply manner it is the reduction of risk. Now the way we view this in market is actually through the lens of fullfillement or rebalancing the inefficiency or rebalancing orderblocks / S&D. The reason it is a reduction of risk is because the BFI ( Banks and financial institutions/whales) is ultimately getting in and out and back in back out of positions 24/7. And as they get into positions and exit positions what they're doin is they closing out previously made large orders for purpose of either continuing in a given direction or for the shift and displacement in the current delivery of price.
Example:
Whats happening inside this big push up? BFI is buyin up into these position. Basically they're profiting of this bullish run. Upon this making bullish run they need to places that they can: a) get back into new bullish positions b) take profits on existing bullish positions
And this is how BFI ultimately buying the positions. BFI are constantly inputting more and more long orders.
As they do this they need places to take profits on those orders.
When we have a structural delivery of price and price trades back into a demand zone or trades back into some imbalances/inefficiency that existed in the market and then goes higher, what it does is it targets the liquidity that rest at a top of that bullish structure. When that liquidity is raid, the reason that liquidity exist there is because prior dumber/street/uninformed money ( big whales also because they have locked buy stops at top) . When they get ran by BFI, BFI buys. They have been buying all the way in all of these prices and have been makin ton of buys leaving their stops at protected lows are lookin to take profits at those liquidity points.
Why?
Because at the time that price gets to these points up here, what's happening is so many people have begun to sell into the market that those buy stops are ran and as those people have their stop losses triggered in form of buys they buy into big BFI sellers. So these BFI get their positions up and they sell hard into those buyers. Which is why you often see the fractal delivery of price.
Also the reason why Liquidity grab happen is because BFI that's been accumulating buys along the entire bullish move are finally able to unload a ton of short positions into all the market participants that are beginning to finally try to call their top.
