Sydney, NSW, Australia
Experience: Intermediate
Platform: NinjaTrader with Jigsaw DOM
Trading: CL, 6E, ES, Piano
Posts: 264 since Nov 2014
Thanks Given: 229
Thanks Received: 250
|
Some of the time they will be a big guy gaming the market doing a "flip" where he buys the market above a level where
stops are likely to be like an obvious high, and then he absorbs the stops above that high, and sells it back down so all the breakout guys puke out their longs and sell, and then the trader will buy back his short for a profit. Usually this will be when the market is rangebound, as if you are doing a flip you dont want to get run over by a trending market. This is stuff I heard from the no bs trading course by John Grady. I personally find that significant stop hunts are good reversal signs of daily momentum and show institutional guys with large orders to fill, and these occur strong s/r levels, I characterize them by a sudden influx of orders driving the market into and they beyond the level, and then have the bids/offers immediately refresh, its really like a spike up or down into the level. The key is that the volumes should be very high, highest of the day or close to that (either on a 1 min, 3 min or 5 minute chart as it happens in a short amount of time). IF you use delta there should be a significant wick on the relevant price candle, it doesnt have to be a hammer, but have a strong down or up candle on the delta and that shows a large amount of market orders getting absorbed. In reality stops are placed everywhere, and not every cluster of stops getting hit is a stop hunt, they can also lead to violent moves up or down.
Understanding yourself is just as important as understanding markets. |
|