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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?

  #1 (permalink)
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Stop Hunts - Are they really what the name entails? Or is there more to them?

Today during Globex I saw it setting up for an inverse H&S on the 15 minute chart. I'm still new and thought okay, I know this one! So I go long near the head. It starts to make the shoulder and I'm excited. Here we go! Blast off! I'm going to have SUCH a nice steak this weekend y'all don't even know! Then sometime between 10:15-10:20, it literally plummets within a microsecond (it's that doji you can see before the rally). That doji's bottom literally took less than a second before instantly snapping back up. Four points in the blink of an eye. It came down so quick I closed my position. Then it proceeded to go up thirty points for the rest of the day. I was so stunned I couldn't take another long entry. Through teary eyes I watched it rally higher and higher as "Hurt" by Johnny Cash played on my speakers.

I know naturally I'd roll my eyes and say "there's that crap they do again". But I was wondering if some of the more experienced traders can offer some insight on it. Did they do all that just to "test" 2562? That's a test? A test for whom? Themselves? By "they and them" I'm of course referring to whatever imaginary enemy I envision to be the culprit behind these stop runs. I know the traditional advice is to have had my stop below 2560 but I just don't understand why they have to do that. I mean I guess I understand "why" but...is predatory intent really all there is to it? Same with some of the topping wicks later in the day. They were again millisecond whips I assume to take out any shorts before going down ANY way. Okay sure those topping wicks today align with some other insignificant wick from the prior day that was neither support nor resistance, which I'm sure also took a millisecond to make.

I can't help but wonder though...maybe there's something in footprint charts or something that would explain these moves. Like "oh that was just where a lot of sellers were". Something more technical than "it's a stop hunt". Or maybe those blink of an eye flashes are caused BECAUSE stop orders are being hit?

P.S - Usually when I ask a question here, someone always says "you don't know what you're doing, stop trading". Just help me. I just wanna learn that's all. You're better than me. I'm as sure of it as you are.

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  #2 (permalink)
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  #3 (permalink)
You did what?!
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LOL you had me laughing on that one man Sorry about the trade though, that sucks.

We get them in 6E fairly often but they're not typically violent moves unless there is a news announcement involved. Maybe it was a HFT/algo thing to hit like that?

They are prevalent in forex currency trading even more so than futures because most brokers are market makers, trade against their clients, can see all of their clients' account information, where their stops are, and can open the spread to grab them. Different and a much dirtier ploy than what you see in futures. Not saying that it happens all the time but... yeah... they're real lol. I don't think this is possible in a regulated futures exchange.

To push the market around, the big players need BIG size. What better way to get some easy ones than to engineer a run back to where stops are likely to be hiding (instant liquidity,) shake out the weak holders and take over their positions? If they can spend 25K volume in longs to get 50K in shorts, you better believe the possibility is on the table.


Last edited by Rrrracer; January 10th, 2019 at 07:55 PM.
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  #4 (permalink)
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This post has been selected as an answer to the original posters question Answer

Yes, there are stop hunts. I see it not as just one group of traders but all traders actively hunting stops.

As for actual stop runs, this type of activity can be caused by a few different types of activity. One type of activity is when the liquidity providers pull liquidity from the book. These are forced runs. However, it can also be caused by unstable dynamics because too many short term speculators make the same prediction. It can also be caused by aggressive HFT (and momentum speculators) driving prices near highs or lows. It is often a combination of HFT seeking only a tick or two and retail traders. And, then there are also program buys and sells. In the ES, program buying is often trigger to occur on new highs or lows. Most of the time the big rallies are caused by short term speculators getting wrong sided when program buys/sells go off near lows/highs. Many trading dynamics are caused by differences in leverage.

As for what you could do, you could have re-entered more aggressively. Tighter stops tend to favor more aggressive trading. The very big risk with more aggressive style of trading though is having a run of serially correlated losers. So, you need to either switch sides or have something like 2 try rule.

Right as for double bottoms. The first bottom stops out the long speculators and the second one gets everyone short which is why they are can be so powerful. Most of the really big suspect stop runs in the ES are historically designed to stop out shorts. But yes, they do happen.

Most stop runs also occur during lower liquidity periods, i.e. overnight. One way this manipulation can occur is if a liquidity provider controls enough liquidity both sides of the market. They wait until speculators get long sided then pull the resting orders. At same time, they may post large size in the book to signal to HFT to short/sell into their zone. These large orders are programmed to generally be 1 tick in front of retail traders targets.

The other side to the stop run or vacuum effect. I have thought about this too is a dynamic caused by momentum and value buyer dynamic. Momentum buyers drive price away from value. It becomes a risk to a liquidity provider to keep bidding the market because the momentum buyer can then dump out on the liquidity provider if they keep backfill. So, in lower liquidity markets you can sometimes see the backfill risk dynamic at work.

As for your particular incident, I haven't checked anything specific to that event and others may have better explanation.


Last edited by tpredictor; January 10th, 2019 at 08:21 PM.
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  #5 (permalink)
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JMoniker View Post
Today during Globex I saw it setting up for an inverse H&S on the 15 minute chart. I'm still new and thought okay, I know this one! So I go long near the head. It starts to make the shoulder and I'm excited. Here we go! Blast off! I'm going to have SUCH a nice steak this weekend y'all don't even know! Then sometime between 10:15-10:20, it literally plummets within a microsecond (it's that doji you can see before the rally). That doji's bottom literally took less than a second before instantly snapping back up. Four points in the blink of an eye. It came down so quick I closed my position. Then it proceeded to go up thirty points for the rest of the day. I was so stunned I couldn't take another long entry. Through teary eyes I watched it rally higher and higher as "Hurt" by Johnny Cash played on my speakers.

I know naturally I'd roll my eyes and say "there's that crap they do again". But I was wondering if some of the more experienced traders can offer some insight on it. Did they do all that just to "test" 2562? That's a test? A test for whom? Themselves? By "they and them" I'm of course referring to whatever imaginary enemy I envision to be the culprit behind these stop runs. I know the traditional advice is to have had my stop below 2560 but I just don't understand why they have to do that. I mean I guess I understand "why" but...is predatory intent really all there is to it? Same with some of the topping wicks later in the day. They were again millisecond whips I assume to take out any shorts before going down ANY way. Okay sure those topping wicks today align with some other insignificant wick from the prior day that was neither support nor resistance, which I'm sure also took a millisecond to make.

I can't help but wonder though...maybe there's something in footprint charts or something that would explain these moves. Like "oh that was just where a lot of sellers were". Something more technical than "it's a stop hunt". Or maybe those blink of an eye flashes are caused BECAUSE stop orders are being hit?

P.S - Usually when I ask a question here, someone always says "you don't know what you're doing, stop trading". Just help me. I just wanna learn that's all. You're better than me. I'm as sure of it as you are.

just stop trading you don't know what your doing .. lol kidding

liek the others have mentioned forex is a little bit worse then futures but if you start thinking like big bank then it will help you out... you stop run today was nothing more then someone(s) trying to get the best position before moving up. I would advise adding extra room to your stop loss. I don't know how you trade but I personally try to get my stop losses to a point where if they are hit I am defiantly wrong and the market is doing me a favor by taking me out at this level.. does that always work hellll no! Your stop should have been a decent amount below the H/S formation. You also have to think about a lower time frame someone could be shorting this on a 1 minute chart so there is a 2 legged pull back on the 15 minute chart. Again i dont know your trading style but if you are trading 15 minute bars while the bar is moving keep thinking about what is happening on a lower tf.. what does a doji mean on a larger TF ?? it means that someone most likely got trapped going short and the bulls came in a broke price out from that lower time frame... ( obviously if the wick is the other way then bulls got trapped )

but on the flip side we see a lot of whips and if we have a have these dojis sometimes the wick will actually point you in the direction of the trade...

-P

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  #6 (permalink)
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If you are a momentum trader w/quicker trade to targets - I would keep stops tighter, and as mentioned previously (if stopped out) - give it one more go on a re-entry (it happens).

If you are a trader that gives the market room to ebb and flow some & are looking for more technical targets further out (if the opportunity presents) - it's very simple, (again explained above my post) - you must honor a wider technical-based stop.

It's not anymore complicated than that and if the risk is too high for any trade - wait for another if you don't like really 'loose' initial stops and/or if the move has begun, try and find a spot within the move that gives you a fair entry w/confirmation.

As to the ES - yes, it is an institutional-driven market (HFT algos/prop trading/large banks-Wall St. firm trading desks) that move the markets. Those weird blips and dips, simple as re-balancing inventory before another directional bet and algos front running and prop/trading desks keying off globex/European early session s/r, daily/weekly & monthly #s they for whatever reason believe to have value or are a jumping off point to begin building or reducing position sizing.

But that shouldn't concern us, the lowly retail trader 'cause we are not in control of any of that nor do we know what any of those players are thinking in the moment.

They don't really either - it's just they have size and can move in and out of positions and at times make very aggressive directional bets w/enough room and time to see if they are right.

HFT Algos - who the f*ck knows what triggers that? It's a myriad of things that have to do w/level 2 & 3 quotes and dark pools and being ahead of retail & being programmed by a variety of different people for different approaches all to jump in and jump out all the time - at inflection points in the market (much like you wrote about), it can be very frustrating to have the direction correct but the timing and/or initial stop 'too tight.'

Jump back in is really the only option 'cause if the market is following through w/volume and pace and directionality after 'wiggles/jiggles' and noise - then traders with alot of experience are all over the REAL move that materializes after (just like today).

Takes time and experience and a little bit of moxie to get back in whilst basically forgetting about focusing on why that little move popped you out of your trade for a crappy loser.

Just stay in the moment without judgement and try and keep your brain analyzing logically w/your regular checklist of trading principles for intraday 'checking down' your options.

Much like an NFL quarterback - go through your scenarios and if the 1st option didn't pan out then keep scanning the field for additional (if applicable) 2nd & 3rd scenarios and try not to overanalyze them when they pop out at you.

Just go back in if it fits your trading plan. You just need alot more reps in these types of conditions that don't initially conform to what your analysis initially tells you.

Oh, and trade w/money that doesn't mean anything to you (size appropriately). Like your stop outs don't affect you anymore than popping into an overpriced bodego 'cause it's convenient and you drop $10 on a soda and a snack. It's annoying but 5 minutes later it's not even in your mind anymore.

Cheers!

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Unread   #7 (permalink)
Keab
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JMoniker View Post
Today during Globex I saw it setting up for an inverse H&S on the 15 minute chart. I'm still new and thought okay, I know this one! So I go long near the head. It starts to make the shoulder and I'm excited. Here we go! Blast off! I'm going to have SUCH a nice steak this weekend y'all don't even know! Then sometime between 10:15-10:20, it literally plummets within a microsecond (it's that doji you can see before the rally). That doji's bottom literally took less than a second before instantly snapping back up. Four points in the blink of an eye. It came down so quick I closed my position. Then it proceeded to go up thirty points for the rest of the day. I was so stunned I couldn't take another long entry. Through teary eyes I watched it rally higher and higher as "Hurt" by Johnny Cash played on my speakers.

I know naturally I'd roll my eyes and say "there's that crap they do again". But I was wondering if some of the more experienced traders can offer some insight on it. Did they do all that just to "test" 2562? That's a test? A test for whom? Themselves? By "they and them" I'm of course referring to whatever imaginary enemy I envision to be the culprit behind these stop runs. I know the traditional advice is to have had my stop below 2560 but I just don't understand why they have to do that. I mean I guess I understand "why" but...is predatory intent really all there is to it? Same with some of the topping wicks later in the day. They were again millisecond whips I assume to take out any shorts before going down ANY way. Okay sure those topping wicks today align with some other insignificant wick from the prior day that was neither support nor resistance, which I'm sure also took a millisecond to make.

I can't help but wonder though...maybe there's something in footprint charts or something that would explain these moves. Like "oh that was just where a lot of sellers were". Something more technical than "it's a stop hunt". Or maybe those blink of an eye flashes are caused BECAUSE stop orders are being hit?

P.S - Usually when I ask a question here, someone always says "you don't know what you're doing, stop trading". Just help me. I just wanna learn that's all. You're better than me. I'm as sure of it as you are.

I find the best way to think about a stop hunt is to call them liquidity sweeps. Large traders, who are loaded with profitable longs or shorts opened a while back, need large areas of liquidity (stops) to close these positions at a profit without causing a big reversal in price meaning they lose more profit. So if people are loaded with 20,000 contracts of ES longs and they want to close them then where can they do this without smacking prices lower? Where liquidity lies. The liquidity are stops.

One thing which really helped me was to understand that MOST days are technical days, where price doesn't have any new info i.e. .surprise big announcement good/bad economic news, which means there is no fundamental reason for price to move sharply to new levels. Those days with new fundamental data leading to price having to move to different levels to reflect this new data are the trend days. In the absence of trend days then price will ping between technical levels, and will be driven by stop hunts and traders being caught on the wrong side and having to exit. They can still give good moves as price can still reprice by 20-40 points even on a non trend day as some traders have to exit their losing positions if they're caught on the wrong side!

I can highly recommend viewing videos by Market Traders Daily then do an excellent summary of stop hunts, market structure etc. No I am not a shill, they're just good that's all.


Last edited by Keab; January 12th, 2019 at 08:34 AM. Reason: update
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Unread   #8 (permalink)
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JMoniker View Post
Today during Globex I saw it setting up for an inverse H&S on the 15 minute chart. I'm still new and thought okay, I know this one! So I go long near the head. It starts to make the shoulder and I'm excited. Here we go! Blast off! I'm going to have SUCH a nice steak this weekend y'all don't even know! Then sometime between 10:15-10:20, it literally plummets within a microsecond (it's that doji you can see before the rally). That doji's bottom literally took less than a second before instantly snapping back up. Four points in the blink of an eye. It came down so quick I closed my position. Then it proceeded to go up thirty points for the rest of the day. I was so stunned I couldn't take another long entry. Through teary eyes I watched it rally higher and higher as "Hurt" by Johnny Cash played on my speakers.

I know naturally I'd roll my eyes and say "there's that crap they do again". But I was wondering if some of the more experienced traders can offer some insight on it. Did they do all that just to "test" 2562? That's a test? A test for whom? Themselves? By "they and them" I'm of course referring to whatever imaginary enemy I envision to be the culprit behind these stop runs. I know the traditional advice is to have had my stop below 2560 but I just don't understand why they have to do that. I mean I guess I understand "why" but...is predatory intent really all there is to it? Same with some of the topping wicks later in the day. They were again millisecond whips I assume to take out any shorts before going down ANY way. Okay sure those topping wicks today align with some other insignificant wick from the prior day that was neither support nor resistance, which I'm sure also took a millisecond to make.

I can't help but wonder though...maybe there's something in footprint charts or something that would explain these moves. Like "oh that was just where a lot of sellers were". Something more technical than "it's a stop hunt". Or maybe those blink of an eye flashes are caused BECAUSE stop orders are being hit?

P.S - Usually when I ask a question here, someone always says "you don't know what you're doing, stop trading". Just help me. I just wanna learn that's all. You're better than me. I'm as sure of it as you are.

Also-can you post charts to show what you're talking about? Kind of hard to follow otherwise!

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Unread   #9 (permalink)
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Answer
This post has been selected as an answer to the original posters question Answer

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.

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Last edited by Pa Dax; January 12th, 2019 at 11:05 AM. Reason: adding chart
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Unread   #10 (permalink)
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It's all in your head


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.

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