#Earlier, we have learned that market makers benefit from the losses endured by retail traders, now what do they do in this uncentralized and unregulated market?
STOP HUNTING
When a stop loss is hit there are two things involved:
1. You lose money to the market makers
2. You are taken out of a trade which may unfold to be a good trade, hence you are out of the profit release stage.
Suppose you were a market maker taking orders from the less informed, you know their stop loss levels, what would you do?
Drive the price at the area where many traders have chosen to place their stop loss & stop orders, after running into that area of liquidity, reverse the market. That’s a simple definition of stop hunting. This is how it occurs in the 15 mins chart, right after the Asian close there occurs a turtle soup stop raid and then a Judas swing.
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