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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?

  #21 (permalink)
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  #22 (permalink)
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JMoniker View Post
...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.

The only problem with your trade was that you didn't plan to risk enough. A planned stop should be at least 3t under that previous L (head). Stops go below tails. Drawings get anchored to bodies. The textbook H&S target is 200% on the retracement tool so that's a reasonable risk/reward ratio. So, your H&S was a good trade that succumbed to a planning error. That's not so bad.

In my experience, measuring these adjacent symmetrical ranges helps me set my risk and reward. I wouldn't have been looking for the H&S, but if I was long, I would still be looking to exit at 200%. The drawing would also have helped suggest a standing limit buy for the BOPB that came later when they "tested" the armpit. Apparently they didn't like it and promptly retreated. Or maybe the hunted got stopped out. The important thing is where, not who, why or how.

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  #23 (permalink)
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Interesting Topic


Can't say for sure with respect to your trade, but I see this kind of the other way.

There are edges out there that operate to hunt thin limit order levels. The limit order DOM is publicly visible, so some traders can take advantage of a few thin levels by sending a fairly large market order in that wipes 2,3,5, levels. This can serve a number of purposes depending on the trader, (averaging in, moving towards a target, etc.) but it is a common strategy.

By contrast someone couldn't as easily do this with the stop order queue because it is not publicly visible on most major exchanges. There may be some in house, less regulated stuff out there where this is not the case, but for the CME for example no one can see the market order queue. So if someone was trying to knock out a few levels of stops for some reason, this would be a wild guess at best. I can't imagine there is any edge to it, so I don't think anyone is doing this in the same way that people use thin limit order levels to time the market.

A lot of the speculation around stops being hit so fast and so easily (so darker forces must be at work) is driven off of not understanding how order types work under the hood. You can see the market hit your limit order price and tick to and from it 5, 10,15, times but never fill you, but if the market even gets near your stop order, you will get filled immediately. This is not black magic, it's just how limit orders and stop orders work. Most limit orders won't fill unless they are traded through. All stop orders will fill if they are touched, and in a lot of cases high latency retail software won't even keep up to show the fact that your stop was hit by some tiny wick of a candle for 1 ms. So this creates the illusion that darker forces are at play. Also with limit order entries, often times traders place their stops too close to their entries and don't realize that the only way they will get filled to enter the trade is if the price trades through their level. This often comes with moment that kicks back 2 or 3 extra ticks. Well if you set your stop at 3 ticks, there you go. Your entry order was filled, and the price immediately hit your stop before you could even see it on the screen. This isn't a stop hunt though, it's just the way these order types work.

Best of luck!

Ian

In the analytical world there is no such thing as art, there is only the science you know and the science you don't know. Characterizing the science you don't know as "art" is a fools game.
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  #24 (permalink)
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iantg View Post
A lot of the speculation around stops being hit so fast and so easily (so darker forces must be at work) is driven off of not understanding how order types work under the hood. You can see the market hit your limit order price and tick to and from it 5, 10,15, times but never fill you, but if the market even gets near your stop order, you will get filled immediately. This is not black magic, it's just how limit orders and stop orders work. Most limit orders won't fill unless they are traded through. All stop orders will fill if they are touched, and in a lot of cases high latency retail software won't even keep up to show the fact that your stop was hit by some tiny wick of a candle for 1 ms. So this creates the illusion that darker forces are at play. Also with limit order entries, often times traders place their stops too close to their entries and don't realize that the only way they will get filled to enter the trade is if the price trades through their level. This often comes with moment that kicks back 2 or 3 extra ticks. Well if you set your stop at 3 ticks, there you go. Your entry order was filled, and the price immediately hit your stop before you could even see it on the screen. This isn't a stop hunt though, it's just the way these order types work.

Best of luck!

Ian

I think this is a really good dose of reality about the "dark forces" that supposedly are after our stops. That doesn't mean that no one goes after stops; I would say that the placement of stops sometimes makes it nearly inevitable that some other traders will scoop them up in their hunt for liquidity to fill their trades.

I wouldn't say that the motives of the "big guys" are necessarily all that innocent either -- but there is also a lot of paranoia about the subject:

1. As several people have posted in this thread already, the big players are really not after you. They don't even know you're there, and the size of their trades make anything you or I do irrelevant to them anyway.

2. But some small traders will do as Ian just laid out, and are basically setting up a stop hit for no good reason.

3. And a whole bunch of small traders will place their stops at just about the same places, just like they have been instructed to do by their books and trade instructors and internet gurus.

#2 is basically just a mistake in trade entry and management, based on not understanding the market.

#3 is like putting up a sign that says, "Come and get it." The individual small trader doesn't have the size to matter, but a whole group may very well, and the market, as many have pointed out in different ways, seeks liquidity -- i.e., goes where the orders are. Also, it is easy enough to look at a chart and know where the stops will be placed. An entry going the other way would be easily filled there....

I think the bottom line is, don't worry about anyone going after your very own stops: no one cares about them. And also, if you put them right at the obvious places, you will have lots of company. You probably don't want that.

In any case, if your stops get mysteriously picked off all the time, you should think about why you put them where you do.

Bob.

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  #25 (permalink)
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bobwest View Post

#3 is like putting up a sign that says, "Come and get it." The individual small trader doesn't have the size to matter, but a whole group may very well, and the market, as many have pointed out in different ways, seeks liquidity -- i.e., goes where the orders are. Also, it is easy enough to look at a chart and know where the stops will be placed. An entry going the other way would be easily filled there....

This is forgetting though that an index future can only stray so far from the cash index without being spread back in line.

The entire $ value of the retail traders is just absolutely nothing. It can't be a profitable strategy for even the biggest hedge fund to try to take out retail trading stops on an index future because other hedge funds would just take them to the cleaners.

I also imagine if you can visualize all the stops they are highly symmetric up and down because there are hundreds of thousands of trading decisions being made with different motivations and time frames. Most aren't even on the book anyway. Any decision being made that is trading large enough to have a market impact is not going to have just a single price point that dumps on the market as if they are a retail trader.

To me this is a clear example of anthropomorphising the market and in doing so it distorts the view of what is actually going on.

There are not dark forces hunting retail trader stops. It was just a losing trade. Next trade..

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  #26 (permalink)
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bobwest View Post
I think this is a really good dose of reality about the "dark forces" that supposedly are after our stops. That doesn't mean that no one goes after stops; I would say that the placement of stops sometimes makes it nearly inevitable that some other traders will scoop them up in their hunt for liquidity to fill their trades.

I wouldn't say that the motives of the "big guys" are necessarily all that innocent either -- but there is also a lot of paranoia about the subject:

1. As several people have posted in this thread already, the big players are really not after you. They don't even know you're there, and the size of their trades make anything you or I do irrelevant to them anyway.

2. But some small traders will do as Ian just laid out, and are basically setting up a stop hit for no good reason.

3. And a whole bunch of small traders will place their stops at just about the same places, just like they have been instructed to do by their books and trade instructors and internet gurus.

#2 is basically just a mistake in trade entry and management, based on not understanding the market.

#3 is like putting up a sign that says, "Come and get it." The individual small trader doesn't have the size to matter, but a whole group may very well, and the market, as many have pointed out in different ways, seeks liquidity -- i.e., goes where the orders are. Also, it is easy enough to look at a chart and know where the stops will be placed. An entry going the other way would be easily filled there....

I think the bottom line is, don't worry about anyone going after your very own stops: no one cares about them. And also, if you put them right at the obvious places, you will have lots of company. You probably don't want that.

In any case, if your stops get mysteriously picked off all the time, you should think about why you put them where you do.

Bob.

As always thank you Bob and everyone else who has replied so generously. I didn't get stopped out on the trade, I closed it myself following the horror of how fast that wick came down. It wasn't orders like watching bids being taken out as it came down. It was as if the entire bid side of the DOM disappeared for a second. If you say out loud "one, two". That was the speed of that wick. One for down, two for back up. I closed the position within that one, two. As fast as it came, I felt like it was going to blow straight through where I would have had a stop. Four points faster than a blink.

PS - Was anyone watching ES during that spike yesterday? They showed 1600 size on the ask at 2623 for hours and then it shot up like the fury and wrath of all my hopes and dreams. It was captivating and also heart breaking. There must have been people who had short positions. Could that be interpreted as them trying to accumulate as many longs as they could in the twenties before taking it up to the forties? What's comical about that spike is that it went up and then retraced the entire thing back down. From a "this is how markets work" perspective, what was the purpose of that? Held it down with big ask size, shoot it up like lightening, and then go right back down to where it started. 20 points up, 20 points down. I could see if it shot to 2640, then retraced half, and then continued up. But it shot up and came right back down to where it started. Wait as I'm typing this a new idea popped into my head. How about they NEEDED to sell it in the 40s so when it came back down, that was THEM taking profit. Eh? Eh? Pretty good right?!

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  #27 (permalink)
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Was anyone watching ES during that spike yesterday? [1/17/19] They showed 1600 size on the ask at 2623 for hours and then it shot up like the fury and wrath of all my hopes and dreams. It was captivating and also heart breaking.

Your choice of words indicates that a chart caused you to get emotional. It happens to me too, so I work to correct it in real time. I'm not there yet but making progress. I look for indicators in my behavior, such as talking out loud in strings of expletives. This would have been one of those days if I had been attempting to fade the bull. I laid out my regular channel measuring tools on the intraday chart and all of them produced range extensions that were blown out beyond my risk.

So, I went to the daily chart and saw that 2625 was an important price for a lot of participants. Its the bottom of an 8 week sideways bear flag. So, the spike is a BO of sorts, in that price moved above established resistance. Or a break in, because price moving back inside the flag is important. The entire Santa Selloff has been taken back. Its also a failed BDPB and I can see myself taking shorts in this area and they would have been losers. I also see that the spike ended within 3t of the fib extension 100% (blue) and set up a nice 75t short.

I'll never know the who and why of it, so I would just go back to work with the charts and plans.

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Stop Hunts - Are they really what the name entails? Or is there more to them?-es-190118-daily.png   Stop Hunts - Are they really what the name entails? Or is there more to them?-es-190118-intraday.png  
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  #28 (permalink)
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Leon of Pizza View Post
Your choice of words indicates that a chart caused you to get emotional. It happens to me too, so I work to correct it in real time. I'm not there yet but making progress. I look for indicators in my behavior, such as talking out loud in strings of expletives. This would have been one of those days if I had been attempting to fade the bull. I laid out my regular channel measuring tools on the intraday chart and all of them produced range extensions that were blown out beyond my risk.

So, I went to the daily chart and saw that 2625 was an important price for a lot of participants. Its the bottom of an 8 week sideways bear flag. So, the spike is a BO of sorts, in that price moved above established resistance. Or a break in, because price moving back inside the flag is important. The entire Santa Selloff has been taken back. Its also a failed BDPB and I can see myself taking shorts in this area and they would have been losers. I also see that the spike ended within 3t of the fib extension 100% (blue) and set up a nice 75t short.

I'll never know the who and why of it, so I would just go back to work with the charts and plans.

lol "talking out loud in strings of expletives" is exactly what I do. I talk out loud all day long in front of the screen. When I see moves that I don't understand, I'll often find myself rolling my eyes or bursting out laughing uncontrollably. It's not where price goes that makes me emotional. It's the speed. The huge flushes, the microsecond moves of 10+ points. The abrupt, DOM stuttering moves that everyone attributes to HFTs or algos. With losses in the six figures I'm humble enough to admit that these sudden spikes probably don't feel natural to me..almost not human because I still don't understand the game fully. It's the speed. The speed constantly angers me. I get so uncontrollably annoyed when my DOM starts acting crazy because of these "algo" moves that may not even be algo-driven at all. My frustration isn't even because I take a loss. I've been flat for most of the month. I watch constantly, flat, and still become furious as if I'm some kind of justice warrior for all that is ethical in the world. Which is ironic because I've had huge wins from those types of move before, where I'm sure others may have lost. (I think you can see my OCD coming through with these back and forth comments to myself lol).

The hours it spent at 2620, to break out so rapidly, then to retrace the entire thing back, so rapidly yet again, then to continue what it was doing anyway. As you mentioned, if people were short there trying to fade, they would have either been stopped out or forced to cover. Only to watch it retrace the entire breakout back down. The move back DOWN is what rattles my soul. It was like BOOM all retail shorts get out! Followed by BOOM now all long chasers get out. It's like the only way to have played those few minutes safely is to have had a long position from earlier in the day or nothing at all. Which after I say that doesn't sound so ridiculous. I've really been considering swing trading lately. The stress of fighting for a few points and having annoyed conversations between myself and the chart is becoming too much. I also don't have a 9-5 job so I'm watching constantly. No kids, no spouse. I am literally glued. I dread weekends because I have no interest in socializing with people who don't trade and nothing is fun to me anymore other than being a market participant. At this point I don't even think I'm studying or learning anything anymore (other than when I'm on this forum). It's as if I'm only watching the chart to confirm some kind of cynical jaded view I have; taking glee when I see these "evil moves" because it justifies some silly personal superstition about the market.

You're right Leon, my plan is all that matters. I'm coming to the realization that the speed of some of these dips and spikes really isn't relevant. That spike on a chart longer than 5 minutes doesn't actually even look so crazy. It's only because I happened to be watching so closely at the time. If the market wants a certain price level, I'm either going to be prepared for it or I'm not. End of story. I'm gonna go back and study those points you mentioned on the daily chart. The time you took to draw out those extensions, take a screenshot, and reply to my thread means more to me than you can imagine. I did draw extensions that day intraday, and for some reason I got 2630 as a target for resistance. I don't know how that particular day it went all the way to like 2647 so quickly but I'll go back and re-analyze. I recall seeing 2640s as a 200% if I used the extension tool really really wide; like days worth of swings.

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  #29 (permalink)
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I think that more than anything, they're run stops on late entries. You are correct in that 2560 should've been your stop, as that was the start of an uptrend.

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  #30 (permalink)
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JMoniker View Post
It's not where price goes that makes me emotional. It's the speed.

Its the opposite for me. Most of my methods include range predictions and its the outliers that piss me off. When I'm thinking right, I know that they are inevitable. And I like a fast market. I set out limit orders at certain prices per the plan, and I don't care how fast the market is coming at me. When I get filled on a fast little reversal, I like the trade's prospects even more. I think my shorter duration trades are better than the longer ones (same setup, same target).

I don't think about machines or their masters, icebergs, dark pools, retail vs bogeymen, the grey goo apocalypse, whatever.

There's nothing wrong with screen time that doesn't include participation. There's a great webinar here with Peter Davies in which he lays out his "stop trading" approach. He says to commit to 2 weeks of screen time and no trades. Log your setups' performance. Get your relationship with the market back. I paraphrased all that, but check it out. I thought it was real good.

https://www.youtube.com/watch?v=U5kndkv0myM


Last edited by Leon of Pizza; January 21st, 2019 at 09:59 PM. Reason: wrong presenter name
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