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    Stoploss Hunting

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    Ye Total
    The document discusses stop-loss hunting, which is a strategy employed by large traders to manipulate markets. They push prices to trigger stop-loss orders from other traders, forcing them out of their positions. Then the large traders reverse the trend. This is an effective strategy, especially with leverage, as it magnifies the impact. The document advises traders to avoid placing stop-losses at obvious technical levels like round numbers or just at support/resistance, and to instead use tools like the Average True Range to determine stop-loss levels with a buffer beyond support/resistance. However, using ATR also has disadvantages like reducing reward-to-risk ratios and large stop-losses during high volatility.

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    Stoploss Hunting

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    Ye Total
    756 views30 pages
    The document discusses stop-loss hunting, which is a strategy employed by large traders to manipulate markets. They push prices to trigger stop-loss orders from other traders, forcing them out of their positions. Then the large traders reverse the trend. This is an effective strategy, especially with leverage, as it magnifies the impact. The document advises traders to avoid placing stop-losses at obvious technical levels like round numbers or just at support/resistance, and to instead use tools like the Average True Range to determine stop-loss levels with a buffer beyond support/resistance. However, using ATR also has disadvantages like reducing reward-to-risk ratios and large stop-losses during high volatility.

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    Stop Loss Hunting

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    The document discusses stop-loss hunting, which is a strategy employed by large traders to manipulate markets. They push prices to trigger stop-loss orders from other traders, forcing them out of their positions. Then the large traders reverse the trend. This is an effective strategy, especially with leverage, as it magnifies the impact. The document advises traders to avoid placing stop-losses at obvious technical levels like round numbers or just at support/resistance, and to instead use tools like the Average True Range to determine stop-loss levels with a buffer beyond support/resistance. However, using ATR also has disadvantages like reducing reward-to-risk ratios and large stop-losses during high volatility.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    756 views30 pages

    Stoploss Hunting

    Uploaded by

    Ye Total
    The document discusses stop-loss hunting, which is a strategy employed by large traders to manipulate markets. They push prices to trigger stop-loss orders from other traders, forcing them out of their positions. Then the large traders reverse the trend. This is an effective strategy, especially with leverage, as it magnifies the impact. The document advises traders to avoid placing stop-losses at obvious technical levels like round numbers or just at support/resistance, and to instead use tools like the Average True Range to determine stop-loss levels with a buffer beyond support/resistance. However, using ATR also has disadvantages like reducing reward-to-risk ratios and large stop-losses during high volatility.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 30

    BHARAT JHUNJHUNWALA

    HUNTING
    STOP LOSS
    SMART MONEY
    MANIPULATIONS.
    What is Stop Loss Hunting?
    Stop hunting is a trading strategy that involves large traders pushing the
    market to trigger the stop-loss orders of other traders. The stop-loss orders
    force these traders out of their positions, and once those orders are cleared,
    the market reverses.
    Stop hunting is a strategy that large (or “whale”) traders employ in financial
    markets. When these whales see a cluster of stop-loss orders resting near the
    same price location, they push the market through the orders, forcing the
    participants out of their positions. This strategy becomes even more effective
    when leverage is involved, as the size of the market trades is magnified.

    After an effective stop hunt is completed, the whales begin to close their
    position, and the trend reverses. This is especially aggravating to traders, who
    are forced out of their positions — only to see the market reverse and trend in
    the direction they had initially analyzed.
    Why Stops are Hunted?
    The whales get a better bargain
    To generate enough liquidity for their positions without rigging the prices.
    What are we missing then?
    Two Major Stop-loss mistake that we make!

    Fixed Rupee Stoploss


    Stop losses at the most obvious levels.
    Fixed Rupee Stoploss
    Setting stoploss irrespective of any technical
    levels.
    Stoploss at most obvious levels:
    Round Numbers
    Just at support/resistance.
    How to save ourselves from Stop - Hunting?
    Give your stops room at support / resistance levels:

    Place a stop loss just below or above the resistance/support levels. Take a
    mathematical buffer of 0.5%

    Use technical analysis tools: ATR


    Since this 0.5% number is arbitrary, all stocks may
    not follow it accurately.

    So, to overcome this bottleneck, we will use ATR,


    which is a better measure of the price range at that
    time.
    The disadvantages the ATR method:
    Keeping SL based on ATR sours Reward to Risk Ratio.
    Sometimes during high volatility (large range) moves the SL will be large.
    www.prorsi.com

    +91.9748173333

    jhunjhunwala_b

    Bharat Jhunjhunwala

    [email protected]

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