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Stop Hunts - Are they really what the name entails? Or is there more to them?
Stop hunting absolutely happens. Just image that there's 100 people in the market. Half of them are long and half of them are short. None of them will exit their trade until they either reach their target, or their stop is hit. Since there has to be a buyer for every seller, price can't move at this point until someone's stop gets hit. Obviously the market is more complex than this, but hopefully that's a clear enough scenario to explain why this type of behavior is so prevalent in markets.
But the real question here is:
You absolutely can see things in footprints, volume profiles, and order flow tools that will give you some idea about where people's positions are and where they will puke. Keep an eye on what prices provide support / resistance, what prices we go right through, what prices the market appears to think are fair, and what the average true range for your time period is.
It may be plausible that big operators cannot just buy 1000's of contracts (without moving the market higher). And that they will sell the market down and make use of the liquidity to buy cheaper (from the weak hand holders who become sellers). Who knows? Is it necessary to know? All we have is the chart, price & volume.
I believe in classical TA one should wait for the break of the Neckline (NL). And the stop should be beneath the Head. If that's too wide a stop (too much risk) we can scale down and look at the 1m chart (to find an entry and stop location). We look for supply & demand, cause & effect and effort versus result (Wyckoffs Laws). For those interested I attached the 15m and the 1m annotated charts. Just my personal views.
i've always traded AS IF brokers shared stop info with big clients (hedge funds, banks, prop firms) in exchange for money. but has there ever been actual proof of this happening in the futures markets?
we know about darkpools and how exchanges already sell orderflow info in equities. broker shenanigans in the fx market need no explanation. so you would be stupid to not expect similar fuckery in the futures market and should plan your trading accordingly.
the more you trade, the more you realize how shady as fuck this profession is. we retail traders are the purest and most innocent bunch in that respect.
Get a coin, a mechanical kitchen timer, a stopwatch, spreadsheet software, sim software and a large bacon and green pepper pizza.
Start a spreadsheet to log the data for the sim trades that you'll be taking. Build it out as you learn the requirements of this method. This is important. If you don't have thousands of pages of records after 11 years, maybe that's a problem. This is a pattern recognition game, isnt it?
Twist the knob on the kitchen timer and when it goes ding - flip the coin. If it lands heads up - place a 1 lot market buy on your sim trader. Anything liquid, but stay with the same product. If the coin lands tails up... well you know what to do. After you enter, start the stopwatch.
Now make an exit plan that includes a stop and a limit out. Your job is to find the appropriate exits to maximize the opportunity that you've been given in this random fashion. After you've made your plan and submitted the exit orders, record the elapsed time in your log. Record your planned exit prices - expressed as ticks away from the entry, along with a description of which chart feature (pattern, range, etc) that you're using to exit. Use consistent names for these chart features, so you can easily collect a lot of samples and sort them by name.
Have a slice while you wait for one of the exit orders to fill. At the exit, record the W/L, MAE/MFE (one may come later, so complete the trade's record later). Make a note of how your exit plan performed. Twist the knob again.
Do this every day and do it meticulously. The goal is to quickly know where the exit orders should go by continuously making your support and resistance predictions in real time. Get familiar with a few basic patterns and collect a lot of samples. Risk/reward means nothing in the exercise because you had no say on the entry. If you land in a long, at just above support, your exit plan should have a nice risk/reward ratio, but it would be attributable to a random occurrence. You'll also land short there eventually and should be happy to take just a few ticks with your limit at support.
I've been wondering that. On the faith of a premise that stop hunts are in fact predatory, what if when I look at a chart, I try to find where all the stops WOULD be like you said? Before the whole rally that ensued after the wick in the picture, maybe I could have been like a rock, immovably patient, waiting for that quick stab. I see those types of moves happen so often that like you said, if I just waited to trade around those moves, I could almost build a strategy around it. In essence, not entering because I anticipate a breakout, but entering when I see that wick come down and snap back up. That wick would be the signal, not my inverse H&S. I could have thought "okay, so I'm sure other retail traders see this H&S. They know we like this pattern because it's easy and the Lamborghini guy on YouTube taught me it. I will wait until I see some kind of a hunty move before I enter. The hunty move will be my confirmation". Likewise, if there is a whole bunch of consolidation at resistance, I could think "okay, so there must be a bunch of short stops up here...right above the consolidation. I will wait until they "hunt" the tops first. If it breaks out, hunts the tops, but then fails, THAT is my short entry because I'll know it was just a hunt. It could have been that it simply just failed but I can choose to see it as a hunt. If it breaks out but it's in fact a real breakout, then I know to go long. Whereas before, I would see this consolidation at resistance as "oh the bears are gathering positions up here, I'm gonna short too". Then they say "GOTCHA" as a single tear rolls down my cheek and I start to ponder the meaning of life.
To summarize then, the whole lesson would just be to WAIT. Come to think of it, with all my spectacular losses, how dare I, the daytrading potato, be one to "predict" a move lol, how ridiculous. I should learn to wait for the move that would have hit stops and reacting to it in the right direction. Waiting for that wick in the picture was still not too late to enter. There are also times I've seen where a supposed stop hunt just really wouldn't be "worth it". For example areas of consolidation before a breakout that they've already "hunted" - like a new low that wasn't even really a signal for going short. I think they call them "shake outs". You know, those new lows that happen right before it rallies 57 points and makes a new high. To simplify it even further, I just need to not get in on ranges predicting breakouts. I wait for the breakout of the range. It won't be too late and it's more than I would have made that day anyway. I think I've been confusing waiting for confirmation with chasing. Waiting for that wick wouldn't have been FOMO or chasing. I struggled that day because in my head, I thought I bought the bottom and it shouldn't have came so fast at my precious bottom. I will never buy/call bottoms anymore, same with tops. The only times I've ever made thousands in one day was after days of not trading at all. It's days like that when I see a true opportunity and end up scaling into a massive rally with 8 contracts that I have no business having. In conclusion, I will now strive to become a reactionary potato, not a presumptuous one.
By the way, I got way too much joy out of Leon of Pizza mentioning pizza in his post up there. Far too much.
This. Your drawings are exactly the type of TA that my brain understands quickly. The thing that fascinates me the most about trading is that in that moment of time when I saw that wick come down and jumped out of my skin, somewhere in the world there was you, Leon of Pizza, and others that have replied, that had their own way of analyzing that moment. Pizza had his fib extensions, you had your Wyckoff, some others were watching order flow around that head, and me... I don't know I was apparently doing a scratch and sniff to see how long it had been since I washed my hair or something. I've learned so much from people's replies here that it's a crime I got it for free. I have so much work to do. I want to learn fib extensions better (I can draw the hell out of them and they line up really nicely but I've gotta study the math and logic behind why). I've brushed upon Wyckoff but haven't studied it fully. Watching order flow kind of makes me nauseous, my face gets really oily and I start breathing out of my mouth heavily. You guys have put in the time that I clearly haven't yet and I'm truly grateful. To be honest I've been feeling really down lately and this is the hardest time I've ever had in my entire life. I've never struggled like this before. I did well in school, I did well in business, and for my age I did well in life until I started trading. I see now how easily things came to me before, and I took them for granted. Your replies energize me and give me the will to work harder. I don't take your replies for granted.
It's a very interesting discussion for sure. I've already given my take on it, but I will elucidate.
Regarding the OP's chart/situation, that is not a "stop run." In futures, it's not about running stops, it's about liquidity... where does it exist, what do they do with the liquidity once it's tapped into, and how do we take advantage of it?
Larger pools of liquidity exist above highs and below lows, in the form of stops and fresh buyers/sellers. Big players have the ability to maneuver price to take advantage of these areas in order to accomplish their goals.
Here's a current chart of EURUSD... see what I see. Not saying my explanation is the best, but it is how I interpret it. And I am always open to other opinions
Yes, of course stop hunts are real. They are not vindictive, they are just a natural part of the "smart" money entry tactics. They want the best entry and know where the 'dumb' money lies in wait, so they use their much more considerable might to take your money, improve their entry position and improve the momentum into their trades.
"Dumb" money is always hiding in the same places, it's where you are taught to put it by 95% of the so-called trading educators out there!!!...at a few points or pips below dynamic/static Support and resistance levels, a few points or pips below congestion, continuation patterns etc, etc....The point is that it is always there!! and as a smart money market maker, you are not going to miss out on a free lunch and so you spend a wad of cash to easily move in the opposite direction to where the "dumb" market is not expecting to go....that is why their stop money is waiting there!...and so they make a wad more cash by doing what works every time!!...They are literally laughing all the way to the bank!!!
I see it in the futures market, but it was absolutely rampant in Forex. You would see massive "clearance" dojis (before moves) and trailing spikes (during moves), before price calmly moved in the direct you knew it was going to go in, without you. Yeah it sucks....but you have two choices...either keep doing the same thing and expect a different outcome (Einstein's definition of insanity), or you accept what your ego doesn't want to and do something about it.
First of all you have to
1) Accept that it happens (anything can in the markets)
2) Get over the injustice of it all
Then with the acceptance of what is, you can pro-actively do something about it...may be any of the following:
1) Examine your market for other examples of stop hunting and understand when where and how it most happens. Now you are aware of it and (hopefully) coming to terms with it, you will see other examples of it much more clearly. They will start to stand out on the charts in front of you.
2) Analyze your trading strategy and trade plan to see where they fall foul of the "hunting" you are finding. How does this behavior impact your trading system?
3) Take into account your new findings and modify your strategy/stop losses/entry points/trading style to suit or bypass this market behavior that you have no control over.
The key thing is to remember that you cannot change anything that you have no control over, so concentrate on what you can and accept what is.
I am a short-term momentum trader. Personally, I enter trades with an extra bar or 2 of confirmation of price moving in my direction before entering. This also prevents entering too soon in fake outs etc. I also trade non-price bars, so the spikes and noise are largely dialled out....I monitor time based charts for reference and can then witness all the BS that goes on before, during and after moves take place!
Anyone who says it doesn't happen or it's all in the head is just in complete denial of market dynamics. Don't get caught up emotionally by your new findings, just accept them as part of your learning and do something that impacts your trading positively. We are all continually learning and refining. That is all part of the art.
I hope something I have written has some positive value for you. Good luck.
I've already put in a comment, but I'll put in another one, I hope a little simpler:
No one is looking for your stops. No one knows or cares about your trades, they are too small to matter or even to register. The "big guys" especially don't know or care. (Sorry; they don't care about mine, either. )
It's kind of simple: no one is after your stop, and sometimes shit happens. You'll need to decide on what your stop policy will be, given that you'll often be choosing the exact spot that others may want to use to get in. You can't help the fact that your selling there will help their buying (that's the "liquidity" discussion.) You may want to be aware of this when you place your stops, however.
Everyone is going to have a different slant on how and where to exit, but the thing to know is that no malign force is hunting you.
I've noticed that these "I need help" threads sometimes get a billion answers, and I hope the fact that everyone drops in their theories about the market doesn't confuse things too much.
Each of us individually do not matter but collectively we do.
And our behaviour is same so it is more or less obvious. Add to the fact that our stops are seen ( locally on my platform I can see all stops from my broker). I am sure big players do not have to know Technical Analysis to know where the stops are. This info is available on their screen.
Say A big broker say A has a large buy order say 10000 shares. He buys 5000 at a good level. And now our community buys after him and stops are below the big trader buy level. This is relayed to all big guys and they see this happening. So he sells 2500 shares I which he originally bought at small profit) and market tanks till the big trader buys back 2500 plus more as much as possible and that action again makes market go up.
Now the big broker A also needs to watch out for other big broker B who may have a big buy order too. So he needs to be careful when he uses this tactic. Also the brokers get recognized and paid if they get lowest price ( or highest in case of sales) so they are just following their need( greed) just as we are doing our need( greed).
You can practise your skills all day long, but it's comparatively easy to get better at playing. The hard thing is to get better at winning--anonymous
Yeah it sucks....but you have two choices...either keep doing the same thing and expect a different outcome (Einstein's definition of insanity), or you accept what your ego doesn't want to and do something about it. 
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