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Stop Hunts - Are they really what the name entails? Or is there more to them?


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Stop Hunts - Are they really what the name entails? Or is there more to them?

  #11 (permalink)
 centaurer 
south africa
 
Posts: 169 since Dec 2018


TheShrike View Post
The only boogeymen are in your own head. Retail traders make up a tiny fraction of the overall volume in any market. No one cares about your stop. It's all in your head.

I agree but IMO it is an even deeper issue. To me Yuval Noah Harari's book Sapiens was just completely mind blowing because once you understand what an advantage our storytelling/narrative building brain is you see it all over and misapplied in something like trading/finance.

"The stock market went up today because of X" says the news story headline. Of course building a narrative from a dynamic stochastic system based on one day of data is preposterous but people gravitate to that so naturally you can build billion dollar fictional financial news businesses.

Stop hunting is basically another fictional narrative to try to make sense of a stochastic process.

To me one of the hardest parts of trading is trying to see that stochastic process in its naked form without all these fictional stories grafted on top of it.

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  #12 (permalink)
 Grantx 
Reading UK
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Pa Dax View Post
Nothing to do with stop runners or what ever. The market doesn't care about your step - your trade size isn't relevant to institutions.

You should have just stopped there. The rest makes absolutely no sense and is pure speculation. What kebab said about liquidity is spot on.
Lets reduce and simplify his explanation.
Imagine youre looking at a 20 level price ladder and price is currently at the top. There is only 1 contract at each level below so the entire combined liquidity pool of all the other participants in this price range adds up to 20. Lets also pretend that you are are holding 20 contracts which you need to sell. You are not allowed to sell any contracts worse than 4 levels from where it is now and by that I mean if the market moves down 4 levels, you have to stop selling and wait for buyers to push the market back into your 'sell range'. The quickest easiest way to achieve this is to find liquidity higher up. You have to push the market up in order to sell.

Its quite simple.


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  #13 (permalink)
 
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 MiniP 
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Grantx View Post
You should have just stopped there. The rest makes absolutely no sense and is pure speculation. What kebab said about liquidity is spot on.
Lets reduce and simplify his explanation.
Imagine youre looking at a 20 level price ladder and price is currently at the top. There is only 1 contract at each level below so the entire combined liquidity pool of all the other participants in this price range adds up to 20. Lets also pretend that you are are holding 20 contracts which you need to sell. You are not allowed to sell any contracts worse than 4 levels from where it is now and by that I mean if the market moves down 4 levels, you have to stop selling and wait for buyers to push the market back into your 'sell range'. The quickest easiest way to achieve this is to find liquidity higher up. You have to push the market up in order to sell.

Its quite simple.


would you care to elaborate how he is wrong? I use very similar techniques and works well.

-P

"Truth is not what you want it to be; it is what it is, and you must bend to its power or live a lie"-Miyamoto Musashi
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  #14 (permalink)
 Grantx 
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MiniP View Post
would you care to elaborate how he is wrong? I use very similar techniques and works well.

-P

I never said he was wrong.

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  #15 (permalink)
 
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 JMoniker 
Georgia USA
 
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Grantx View Post
You should have just stopped there. The rest makes absolutely no sense and is pure speculation. What kebab said about liquidity is spot on.
Lets reduce and simplify his explanation.
Imagine youre looking at a 20 level price ladder and price is currently at the top. There is only 1 contract at each level below so the entire combined liquidity pool of all the other participants in this price range adds up to 20. Lets also pretend that you are are holding 20 contracts which you need to sell. You are not allowed to sell any contracts worse than 4 levels from where it is now and by that I mean if the market moves down 4 levels, you have to stop selling and wait for buyers to push the market back into your 'sell range'. The quickest easiest way to achieve this is to find liquidity higher up. You have to push the market up in order to sell.

Its quite simple.


I think I'm following. If I understood correctly, the "hunt" isn't predatory, it actually has no concern for hurting anyone. The moves are for "them" to be able to carry out their desires how they see fit. So from the perspective of that price ladder, I understand why it would go up or down and the intent. To extrapolate further then, what can I do to better grasp their intent? Grant's picture is exactly the vicious doji I'm referring to. I don't understand what they were trying to do with that. Again, with the context of the fact that while it is a 5 minute doji, the bottom wick of that doji (the one with the extremely long tail) with no exaggeration, took 1 second to shoot down, and then 1 second to snap up into the body. The snap down, is that where they wanted to buy, which caused it to snap up? Is that it? Or they sold, which snapped it down, then a liquidity vacuum shot it up? That one long wick stabs through every bar formed since the open, the entire opening range as Grant pointed out, and then proceeds to rally. The stab...the stab is what keeps me up at night.

Everyone's answers are collectively bringing me closer and closer to understanding, I truly appreciate this guys.

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  #16 (permalink)
 
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 Leon of Pizza 
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JMoniker View Post
...inverse H&S on the 15 minute chart.

I never related to the anatomical analogy of the H&S. If you bought 2568, I see that as the shoulder or the neck. I wouldn't be eager to enter there. 2568 is a high volume price coming in to the open, so I wouldn't consider it a place to find a lot of resting stops. I would presume they are below the Globex L. If I wanted to fade a sell stop run below the Globex L, I would have a limit buy sitting at 2556, because its a basic measured move.


Quoting 
Did they do all that just to "test" 2562?

Not in any intentional sense. The "test" is just the revisiting of support. How it came to be revisited is less important than what they will do next. If buyers were trying to sell them down for a Globex L stop run, they failed. All they got was a slightly higher H or a DB. Anyone that got short in the H&S (the flat range) is not getting paid. That makes a case for buying the BO above 2574, which is where their buy stops are resting. So who's hunting who here? I dunno. best to just have a good chart laid out and trade basic S/R.


Quoting 
You're better than me. I'm as sure of it as you are.

Nice.

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  #17 (permalink)
 
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 Pa Dax 
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Grantx View Post
You should have just stopped there. The rest makes absolutely no sense and is pure speculation.

The fact that it makes no sense to you is because of your narrative and the way you look at the market. You're trading based of Wyckoff and volume. That doesn't mean my methods and structure makes no sense. It just means you're ignorant of other approaches that work.
Also, this is an forum for sharing ideas and opinions. Surely you'll find many that you don't support. That's why I started the whole paragraph with 'I look at the price action as' to reflect it's my personal believe of how the markets work based on watching markets move tick by tick for numerous years.


Grantx View Post
What kebab said about liquidity is spot on.
Lets reduce and simplify his explanation.
Imagine youre looking at a 20 level price ladder and price is currently at the top. There is only 1 contract at each level below so the entire combined liquidity pool of all the other participants in this price range adds up to 20. Lets also pretend that you are are holding 20 contracts which you need to sell. You are not allowed to sell any contracts worse than 4 levels from where it is now and by that I mean if the market moves down 4 levels, you have to stop selling and wait for buyers to push the market back into your 'sell range'. The quickest easiest way to achieve this is to find liquidity higher up. You have to push the market up in order to sell.

Its quite simple.

Talk about nonsense and speculation ok. First off, a large number of orders don't come from the book but are simply market orders.
Liquidity an issue?? On the largest futures market in the world during market open? You can sell or buy a 100 lots without the market moving even a tick during these times. Traders in need to find liquidity in this situation is a reason I find hard to believe.

Reality is that there's tens of thousands of contracts traded during that 5m bar for thousands of different reasons. There will never be just one reason why price is making a turn. I'm just looking for my personal explanations that help me place a trade with a good risk reward ratio and this particular pattern is a great one for me.

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  #18 (permalink)
 
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 JMoniker 
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Thank you Leon, I never thought to look at an H&S that way, especially where that level is an armpit. It's crazy how even a simply H&S pattern has so many different interpretations. I used your picture to show that was my inverse head and shoulders I thought I was going for. I guess in hindsight it was silly to expect that shoulder to be perfectly aligned to the other shoulder like on a human. I just wasn't ready for it to come down THAT far to the head, that quickly.

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  #19 (permalink)
 
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 JMoniker 
Georgia USA
 
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Pa Dax View Post
Nothing to do with stop runners or what ever. The market doesn't care about your step - your trade size isn't relevant to institutions.

I look at the price action as a trading range open. The bear reversal bar was a short set-up for bears in a trading range. They sell the close and go for a 1R target. That target is 2565. In addition, disappointed bears who sold the close of bar 4 will also want to get out. They have perhaps sold more at the bear reversal bar and want to get out break-even on their first trade and with a profit on their scale-in. Bulls know about this as well and as a result you see have buying at the 2565 and 2563.75.

If you have gone long on bar 6, you could have exited partially for a 1R profit at 2569.75 (1R) or keep your stop below the low instead of exiting cause it went down. The stop never got hit.


I love theories like this. Your interpretation of what happened in the paragraph. It's like a story of what happened in those few bars. I did go long on bar 6, I did not exit for a profit because I am a potato. I exited when they came down. The past few days had been bad for me and I was hoping my adorable little inverse H&S would work out for me. But when that wick came down like lightening from the sky my mouse hit the "close position" button. I had a mental stop below the low, but I felt like having my stop there was so obvious to them that if I saw price coming down towards the head, I would exit quicker than having it go completely past the head and hit my stop. I should have just put an actual stop below that low and let it play out. I'm always so skeptical of double bottoms because they're too easy and obvious. Which is ironic because that's exactly what it was and it kicked me out. I don't know why I find it so hard to believe that they dropped it four points in an instant to touch EXACTLY the tip of that head and go back up. Not a single tick past. I didn't think it would stop there. The speed of that drop made it felt like it was gonna shoot right past the head and beyond.

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  #20 (permalink)
 Grantx 
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Pa Dax View Post
The fact that it makes no sense to you is because of your narrative and the way you look at the market. You're trading based of Wyckoff and volume. That doesn't mean my methods and structure makes no sense. It just means you're ignorant of other approaches that work.
Also, this is an forum for sharing ideas and opinions. Surely you'll find many that you don't support. That's why I started the whole paragraph with 'I look at the price action as' to reflect it's my personal believe of how the markets work based on watching markets move tick by tick for numerous years.



Talk about nonsense and speculation ok. First off, a large number of orders don't come from the book but are simply market orders.
Liquidity an issue?? On the largest futures market in the world during market open? You can sell or buy a 100 lots without the market moving even a tick during these times. Traders in need to find liquidity in this situation is a reason I find hard to believe.

Reality is that there's tens of thousands of contracts traded during that 5m bar for thousands of different reasons. There will never be just one reason why price is making a turn. I'm just looking for my personal explanations that help me place a trade with a good risk reward ratio and this particular pattern is a great one for me.


For real? You find it hard to believe that larger institutions face different challenges to retailers and that they have no problem finding liquidity??? Your explanation was a subjective view based on your own personal interpretation of a few random candles. It had zero objective fact regarding the dynamics of a stop hunt (if thats what we are calling it). I believe that my explanation as viewed from a ladder chart is immutable. It is simple and makes sense. If you persist on basing your entire argument on the first 5 opening minutes, and deny the evidence from the rest of the days activity, then my friend, you are perpetuating an error based on a single frame of reference. You might want to look into that.

JMoniker, if you haven't done so already, I highly recommend that you spend some time learning to trade from a DOM viewpoint. Its a very different way of seeing the market and it will help immensely with understanding the dynamics of supply and demand. Dont get too pulled into other peoples opinion because there will always be a difference. I encourage you to investigate it for yourself. Ladder trading is a good way to broaden your perspective.

Good luck on your search!

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