As per STOP HUNTING STRATEGY -
Around 75% of retail traders will lose their entire trading account, in large part because they don’t know where to place their protective stop losses. Institutional traders are the ones who profit from individual trader losses as there is predictability in the behavior of retail traders, and how they trade the market. Institutional traders like banks, hedge funds, investment firms, and dealing desk FX brokers, are notorious for exploiting these behavioral predictability.
Stop hunting has a negative connotation among retail traders because they think their individual stop losses are targeted deliberately. In actuality, Institutional traders are only looking for significant clusters of stop-loss orders that are gathered at visible technical levels.
Institutional traders will buy at the levels most retail traders place their stop losses at. As an institutional investor trading larger volumes in a single trade, it’s harder to get an order filled. Occasionally, in order for a large order to get filled, the institutional trader will need to generate the liquidity themselves. And, as retail traders hide their stops at obvious technical levels; this becomes an excellent source of liquidity for the big players to target.
Most common technical levels that retail traders use to hide their protective stop losses are:
§ Support and resistance
§ Previous swing high or swing low
§ Big round numbers
§ Above/below technical indicators
§ Above/below chart patterns
Stop losses will be crowded around these obvious levels, and institutional traders will bid the market at those particular technical levels, so they can get the needed liquidity to fill their big orders at the expense of the retail traders.
SGX Daily Chart--29.04.2019 (11.30A.M)----- Price - 11878
Around 75% of retail traders will lose their entire trading account, in large part because they don’t know where to place their protective stop losses. Institutional traders are the ones who profit from individual trader losses as there is predictability in the behavior of retail traders, and how they trade the market. Institutional traders like banks, hedge funds, investment firms, and dealing desk FX brokers, are notorious for exploiting these behavioral predictability.
Stop hunting has a negative connotation among retail traders because they think their individual stop losses are targeted deliberately. In actuality, Institutional traders are only looking for significant clusters of stop-loss orders that are gathered at visible technical levels.
Institutional traders will buy at the levels most retail traders place their stop losses at. As an institutional investor trading larger volumes in a single trade, it’s harder to get an order filled. Occasionally, in order for a large order to get filled, the institutional trader will need to generate the liquidity themselves. And, as retail traders hide their stops at obvious technical levels; this becomes an excellent source of liquidity for the big players to target.
Most common technical levels that retail traders use to hide their protective stop losses are:
§ Support and resistance
§ Previous swing high or swing low
§ Big round numbers
§ Above/below technical indicators
§ Above/below chart patterns
Stop losses will be crowded around these obvious levels, and institutional traders will bid the market at those particular technical levels, so they can get the needed liquidity to fill their big orders at the expense of the retail traders.
SGX Daily Chart--29.04.2019 (11.30A.M)----- Price - 11878
Note: This is experiment
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