What is stop loss hunting?
It is very important that you know what your news calendar is before you pick on a trade, the news is very important because sometimes you have high impact news coming out, and then you enter a trade, and then the news comes out and knocks your stop loss out, before reversing back again in your favor. So make sure that there is no high impact news coming out before entering a trade.
In trading, stop loss hunting refers to a price movement that appears to target areas where traders have placed stop-loss orders. Many traders position their stops around easily identifiable technical levels, such as the lows of a support zone or the highs of a resistance area. When price reaches these locations, stop orders may be activated and add liquidity to the market. In some cases, price briefly breaks through the level before returning in the opposite direction. This behaviour is often called a liquidity sweep or stop hunt. However, it is important not to assume that every such movement is caused by deliberate manipulation. Markets can naturally move through concentrated orders because of volatility, liquidity conditions, news, and institutional activity. Traders can respond by analysing market structure and volatility rather than placing stops at arbitrary distances. Appropriate risk management and position sizing remain essential when dealing with unpredictable price movements.
Mar 30, 2022 20:49