Stop Loss Hunting Strategy: What Is It & How to Avoid It?

  • Check with seller
  • Published date: June 12, 2024
    • Lucknow City, Lucknow, Uttar Pradesh, India
  • [ #59917 Ads Views - 5 ]

Have You Ever Had Your Stop Loss Hit, and the Stock Bounced Back Right After?

This is a common experience for many traders and is often referred to as "stop loss hunting." Now let’s explore what stop loss hunting is, why it happens, and how you can avoid it. If you're new here, you can always consider this place for the latest market updates and valuable insights.

What is Stop Loss Hunting?

In the stock market, big institutional players, often called stock operators, can be seen as hunters, while retail traders like us are the prey. These big institutions target the stop losses (SL) of retail traders to make profits. It’s like a jungle out there where the hunters aim to "hunt" the stop losses and take advantage of the situation.

How Does Stop Loss Hunting Work?

Imagine a stock is trading at a certain support level. Retail traders set their stop losses just below this support. The market might suddenly crash, hitting these stop losses before bouncing back up. This rapid fall and recovery can be seen as a shadow on the chart, indicating that many stop losses were hit. This shadow forms at the bottom, showing that the big players have triggered many stop losses.

For instance, if a stock has a psychological stop loss level at ₹98 while trading at ₹100, big players might sell aggressively to push the price down. This triggers the stop losses set by retail traders, causing the price to fall further as new traders see the breakdown and create short positions. Once enough stop losses are hit and the selling pressure increases, these big institutions start buying the stock at the lower price, driving it back up.

Example and Charts

Below are the attached charts of Tata Motors, where stop loss hunting can be seen very clearly. Notice how the price broke the support and the very next candle bounced, causing the stock to boom.

For a better understanding of this whole process, you can refer to the attached video.

Why Do Institutions Hunt Stop Losses?

Generating Liquidity

When liquidity is low, institutions hunt stop losses to create more buying opportunities. By pushing the price down and triggering stop losses, they increase the number of sellers, which allows them to buy large quantities at a lower price.

Buying at a Better Price

Institutions prefer to buy at lower prices to improve their average purchase cost. For example, buying a stock at ₹98 instead of ₹100 makes a significant difference when dealing with large orders worth crores of rupees. By hunting stop losses, they can purchase substantial amounts at a cheaper rate.

How Do Institutions Know Where Your Stop Loss Is?

Support and resistance levels are common knowledge among traders. Most retail traders place their stop losses around these psychological levels. Institutions exploit this by targeting these areas, knowing that a large number of stop losses will be triggered.

How to Avoid Stop Loss Hunting

While you can't prevent institutions from engaging in stop loss hunting, you can adjust your strategy to minimize its impact:

Use a 5-Minute Chart

When you suspect a stop loss hunt, check the 5-minute chart. If the market breaks down and there is no significant sell signal within the next five minutes, it might just be a temporary panic. Hold your position and wait to see if the market stabilizes or turns sideways.

Avoid Setting Obvious Stop Losses

Instead of placing your stop losses at common psychological levels, consider setting them at less obvious points. This can reduce the likelihood of your stop loss being targeted by institutional players.

Stay Informed and Patient

Always stay informed about market conditions and be patient. Don't react hastily to sudden price movements. Analyzing the situation calmly can help you avoid falling prey to stop loss hunting.

Share this ads

Useful information

  • Avoid scams by acting locally or paying with PayPal
  • Never pay with Western Union, Moneygram or other anonymous payment services
  • Don't buy or sell outside of your country. Don't accept cashier cheques from outside your country
  • This site is never involved in any transaction, and does not handle payments, shipping, guarantee transactions, provide escrow services, or offer "buyer protection" or "seller certification"

Related listings

  • Dettol Case Study: Global Household पर हावी होने की यात्रा

    Dettol Case Study: Global Household पर हावी होने की यात्रा

    Other Services Lucknow (Uttar Pradesh) June 11, 2024 Check with seller

    डेटॉल की विनम्र शुरुआतDettol Case Study: कल्पना कीजिए कि एक बच्चे को खेलते समय चोट लग जाती है। अत्यधिक bleeding को रोकने के लिए Dettol लगाना तत्काल प्रतिक्रिया है। क्या आपने कभी सोचा है कि Dettol एक घरेलू नाम और प्राथमिक चिकित्सा के लिए आवश्यक वस्तु ...

  • Local SEO Agency Greater Noida

    Local SEO Agency Greater Noida

    Other Services Noida (Uttar Pradesh) June 11, 2024 Check with seller

    A kind of search engine optimization (SEO) called lLocal SEO boosts the visibility of your business in Google’s local search results.

  •  Sundaram Business Cycle Fund NFO: Review, Date & NAV

    Sundaram Business Cycle Fund NFO: Review, Date & NAV

    Other Services Lucknow (Uttar Pradesh) June 8, 2024 Check with seller

    The Indian mutual fund industry has evolved significantly over the past few decades, with early investors now leading the market. Are you dreaming of investing in mutual funds to establish yourself in this industry? Or are you planning to invest your...


Frequently Asked Questions (FAQ) ✅

1. Do I have to Register Before Posting an Ad?

Yes, you have to register before posting an ad with your email ID or social ID. You can browse the ads without registering.

2. How Can I publish an Ad?

You can publish your ad by registering with Best Classifieds 4 U. Login website and then click on publish an Ad button. Select the category & subcategory. Enter the ad title and description, upload the image, choose a location, and process to final post your ad.

3. Can I post the Ad for Free?

Our Best classifeids4u classifieds portal accepted free ads before. But, now, we charge Rs.100 for the publishing fee. We work hard to maintain our classifieds network sites spam-free. Our site (Moz DA-54+ PA-40+) (Ahref DR-20) TF (Alexa- below 35K India) all Ranks are high, and we want only quality & good ads. So, we allow ads with max one external nofollow link per ad.

4. How Can I pay for an Ad?

When you fill out your advertisement form, you have to pay a minimal amount of INR 100 while posting an advertisement. It will likewise offer you the opportunity to redesign your promotion. You can pay for the advertisement website by clicking on the "publish fee pay" button and pay through the Debit, Credit Card, Paytm, UPI, Paypal, Payumoney Secure payment gateway.

5. Why can't I See Ad Posted?

When you submit an ad, then 1st check to my account section. You can see your ad, and if you see the activate option, click on this button & pay the publishing fee. Only publish fee-paid ads live on the website. Sometimes when you post the ad, the classified ad goes into the moderation process, and it will get approved by the admin team later on. So you don't have to worry; your ad will get approved within the next hour.

Publish Genuine Quality Classifieds Ads India USA | Buy Sell Classifieds | Best Classifieds 4 U Portal

Related Sites - www.classifiedsguru.in | www.topclassifieds4u.in | www.freeclassifieds4u.in | www.bestclassifieds4u.in | www.classifieds4u.in


Web Design Development SEO Pune

Disclaimer: This website is made for promoting products & services online. Here seller & buyer or any company posts their ads. Every ad was not possible to moderate. So while using this website, any deal you get any loss we are not responsible. If anyone promotes wrong content or misuses our online advertisement platform, then he/she will face legal action in the Pune MH juridical section. For any Advertisement / Complaint – Submit the Contact Form with more details.

Sunday 21 Jul 2024 09:19:37 pm Total Posted Ads - 24952 | Today's Posted Ads - 6