Stop loss hunting in forex, does it really exist?

Able Trading backtested strategy stop loss hunting

Stop Loss Hunting


You must of heard of Stop loss hunting in trading?

Is stop loss hunting even real you ask yourself?

How many times trading Forex or any other asset have you been stopped out by a pip or two?

The price heads to your stop loss & takes you out of the trade.

Then reverses almost, what seems immediately onto your original direction of analysis.

Sounds all to familiar and frustrating, am I right?

Able Trading stop loss hunting

This is a shake out.

Stop loss hunting exists.

Algorithms are computer generated code that are  automated trading by computers which are programmed to take certain actions in response to varying market data.

Traders with experience know where traders with less experience place there stop loss orders.

And so, this can then be exploited.

Especially for stop loss hunting.

This is where liquidity pools exist. i.e. A collection of orders

AUDUSD Daily price chart

Above is the daily chart of the AUD/USD which demonstrates this.

I know this is after the fact.

Hindsight analysis if you like.

This demonstrates stop loss hunting.

Go and have a look at your charts to see what we mean.

You will see stop loss hunting happens much more often than you think.

You will recognise this on most time frames too.

So, why does this happen?

This is due to professional traders knowing where retail traders (amateurs) are told by their brokers and other educators to place their stop.

Stop loss Hunting Video

Stoploss hunting video

Naturally, they will exploit this through stop loss hunting

They know below significant support and above resistance there will be lots of stop orders.

Traders who trade in large size (I’m talking millions of £/$) require liquidity to get their order filled and they want the best price.

Therefore they want to force some market participants out of the market.

Thus, triggering their stop-loss orders pushing price lower/higher they can take advantage of the liquidity and get a better price.

How to become the hunter and not fall foul of stop loss hunting

We have extensive knowledge in this area and trade with the smart money.

If you would like to learn;

  • How we trade with the hunters and not the hunted
  • On how to avoid stop loss hunting
  • Identifying the very same areas where you can exploit the same traders
  • A stop loss placement technique that keeps us in more trades and at no greater real risk
  • How we apply a simple set of conditions which defines entry, exit and risk before I take the trade

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