Stop hunting with the big players

[SanMiguel]

Why don't you try demo'ing the strategy in places where there might actually be stops instead?

Well, S&R lines would allow a bit too much room in terms of where the line is as all traders will draw them slightly differently. I think where it could be adapted to work is on scalp lines, ie the last place price reversed from if it's a clear high or low.

 

[Skill Leverage]

As a scalper I can tell you that that is complete and utter rubbish. The last place that price has reversed from isn't suddenly going to have a ton of stops clustered around it. You are going about this in completely the wrong way. I think you are seriously underestimating what it takes to trigger stops - you need to spend a few weeks sitting in front of some ladders, you'll see what I mean. The only places you will see stuff like this happen is around levels on daily or 60min charts, places where a lot of people will be getting out. I've also seen it happen when, according to RAN, Goldman got stopped out of a large position. People who just stick an arbitrary stop a tick above the previous high are going to get ironed out, very quickly.

 

[Skill Leverage]

P.S wtf is a scalp line, are you referring to lines on a 1min or something, because if you are, they're a sack of ****.

 

[SanMiguel]

As a scalper I can tell you that that is complete and utter rubbish. The last place that price has reversed from if it's a clear high or low, isn't suddenly going to have a ton of stops clustered around it. You are going about this in completely the wrong way. I think you are seriously underestimating what it takes to trigger stops - you need to spend a few weeks sitting in front of some ladders, you'll see what I mean.

Ok, so S&R lines then. No trader will agree on exact S&R lines in a trending market as they are zones. Difficult to adapt for this strategy.
Do you look at psych levels when trading? If so, why?

P.S wtf is a scalp line, are you referring to lines on a 1min or something, because if you are, they're a sack of ****.

No, example attached on the GBPUSD. Any place price has had a clear reverse from (a few hundred pips on a 4hr chart plus time) where price has not passed recently, ie they can only be traded once...is a scalp line. The 3rd one is a scalp line that could have been used but is now invalid.
These scalp lines may not have stops but they definitely have traders who jump on board when price moves past those points. They are traded differently but have about a 70% success rate.

 

[Skill Leverage]

Those are channels, not scalp lines. And none of them have been broken, so how is that an example?

 

[SanMiguel]

Those are channels, not scalp lines. And none of them have been broken, so how is that an example?

The circled areas. When price breaks them by a certain buffer you trade in the direction it's going say 50stop loss 50 target or whatever you want, different for different pairs. However, if you were to approach it with a different strategy you might increase the win rate. Only the 3rd circle on that chart would have been traded so far, the rest are scalp lines waiting to be traded.

 

[Skill Leverage]

I can categorically tell you that there is not going to be any triggering of stops at that third circle. I could also circle a large number of other places on that chart, or any chart, where price has found new territory relative to the last candle; this does not mean that stops are going to be triggered. You have got this so wrong I don't even know where to begin

 

[Skill Leverage]

With a 50 tick stop and 50 tick profit, you'd probably be OK, since this has roughly a 50% chance of working. You might want to try and negotiate cheaper commissions though, so you can bleed money a little more slowly.

 

[foredog]

So essentially what you're trying to do is buy the breakout of a previous high?

 

[Skill Leverage]

So essentially what you're trying to do is buy the breakout of a previous high?

Looks that way, and as you can see from his own example, it's a great way to do your cheeks

 

[foredog]

with a 50 stop 50 profit yes....

15 and 50 would be better....if it breaks those highs it shouldn't have much of a pullback initially.

I do despair at how so many people try and complicate the simple thing of buying as it goes up/ selling when it goes down and cutting when it goes wrong.

 

[Skill Leverage]

I don't have a problem with breakout trading, but the initial post 'stop hunting with the big players' implies something else entirely. There's a difference between a bunch of people puking their shorts because a previous high has been significantly broken, and big locals deliberately driving price towards an area where a large number of limit orders are going to be triggered.

 

[Black Swan]

with a 50 stop 50 profit yes....

15 and 50 would be better....if it breaks those highs it shouldn't have much of a pullback initially.

I do despair at how so many people try and complicate the simple thing of buying as it goes up/ selling when it goes down and cutting when it goes wrong.

reminds me of an image I drew on a chart a while back; line graph with a ladder when price went up and a hissing snake when it went down... Maybe I could get it as an app on every charting package...

 

[SanMiguel]

I can categorically tell you that there is not going to be any triggering of stops at that third circle. I could also circle a large number of other places on that chart, or any chart, where price has found new territory relative to the last candle; this does not mean that stops are going to be triggered. You have got this so wrong I don't even know where to begin

No, for it to be a valid line, price must have reversed a few hundred pips recently over at least 4 or 5 candles, almost a whole day...otherwise it's not a valid line. At that 3rd circle, price moves past the line for a successful 50:50 trade.

With a 50 tick stop and 50 tick profit, you'd probably be OK, since this has roughly a 50% chance of working. You might want to try and negotiate cheaper commissions though, so you can bleed money a little more slowly.

It's a popular strategy with 70% win ratio so who cares if it's 1:1.

 

[GammaJammer]

That fractal wrongness idea I think is gaining serious credence on this thread. It's like you just keep drilling and drilling and find more wrongness at all levels of resolution......

So I'm gonna post it again - more for my amusement on a slow morning than anything really.....

 

[SanMiguel]

with a 50 stop 50 profit yes....

15 and 50 would be better....if it breaks those highs it shouldn't have much of a pullback initially.

I do despair at how so many people try and complicate the simple thing of buying as it goes up/ selling when it goes down and cutting when it goes wrong.

I don't have a problem with breakout trading, but the initial post 'stop hunting with the big players' implies something else entirely. There's a difference between a bunch of people puking their shorts because a previous high has been significantly broken, and big locals deliberately driving price towards an area where a large number of limit orders are going to be triggered.

Doesn't work with 15, price often hits the 15 stop loss because of traders going short or long at those lines ie it becomes more volatile for a bit.
Ok, suggest a stop hunting strategy based around S&R lines then? Very difficult to get right I think. Better just to trade S&R but that's not what the article was about.

 

[Skill Leverage]

Breakouts of trendlines do work, but you have to wait for the break to be confirmed by the price holding below/above that level - retests of the trendline are often great entry points in terms of r/r. If you pile in long every time a high gets broken, you're going to get squeezed out more often than not.

 

[SanMiguel]

Breakouts of trendlines do work, but you have to wait for the break to be confirmed by the price holding below/above that level - retests of the trendline are often great entry points in terms of r/r. If you pile in long every time a high gets broken, you're going to get squeezed out more often than not.

That's what I originally thought of the strategy 50:50 but it relies on trading volatile pairs so you grab your 40-50pips 70% of the time.

 

[foredog]

Thats why a lot of these articles are just crap.

Trading around stop hunting isn't even trying to second guess the market, it's trying to third guess.

you're trying to figure out where all the stops are and then if it's somebody tring to drive price through there to trigger it or if it's genuine business

Stop hunting strat.......hmm... find a ranging market watch for it to break above and then sell when it pushes back into range?

 

[Skill Leverage]

Stop hunting strat.......hmm... find a ranging market watch for it to break above and then sell when it pushes back into range?

Exactly. That way all the work has been done for you. Once you get to know your market and how far stops tend to trigger based on the strength of a 'level', you can just bid/offer in the appropriate place and take the easy buck. Much better than constantly buying the high on the off chance that it breaks out.