Recruitment of participants Stop Loss Hunting Trading

Stop Loss Hunting Trading



A method that will help you in taking trades with very small stop loss but big gains. This is the method that has very high win rate. You will learn where the stop loss are, when the stop loss hunt has occurred and when you have to get in the trade.

Stop loss hunting (also known as “stop runs”) refers to a situation in which some market participants attempt to manipulate, or push, the price of an asset and drive it to a level where other participants have set their stop losses.

When the price reaches these levels, these stop loss orders are triggered and market volatility increases. This can present opportunities for some investors, because driving the price movement, will profit even further.

Liquidity is the ability to buy or sell something without causing a large price change.

Whenever you see the market move is it due to a lack of liquidity in the market, not because there are more buyers than sellers as is commonly taught in trading literature.

When someone places a market order it removes liquidity from the market because the person who is placing the market order is essentially demanding that his trade is placed right now, his market order is then matched with someone who has pending order to sell placed in the market.

If the market order is bigger in size than the opposing pending order, what will happen is part of the market order will be filled but the rest will remain unfilled, so the market must move higher in order to seek out additional pending orders to fill whats remains of the market order.

What this essentially means is pending orders add liquidity to the market, because they are the orders in which market orders will be matched with.

We as retail traders do not trade at a size big enough to effect the market price, placing and exiting trades is something we never have to think about, for large institution’s however, getting in and out of trades can be a big problem.

Because the trades they place are so big one of the primary goals of a professional trader is get a trade placed into the market with as little impact on the market price as possible, this means finding places in the market where alot of liquidity exist.

Most of the time pockets of liquidity tend to be found at places where retail traders put their stops losses.

The reason why stop hunts are seen frequently in the forex market is down to professional traders placing big trades into the market, they purposely push the price into the location of the stops to unload large trades all at the same price without moving the market a significant distance.