Stop hunting

Discussion in 'Technical Analysis' started by paperboy, Jun 23, 2007.

  1. The ultimate trading method? Nothing moves the market better than stops. But the trick is to know where there are enough stops to create a move in one direction and for how long they will work, right? How do we do that? Patterns, volume, time, cot reports...?
  2. Key market events moves the markets.


  3. That to but mostly stops, no? An event can be interpreted both as buy and sell and new positions does not move so much as fear of losing. If i understand it
  4. stops are just the market participants idea of where risk lies, the aggregate market places stops at points to signify possible sentiment change if price traverses to that point. So most times, the stops distance is too small from entry point, and just based on daily volatility or ATR will likely get hit.

    One can afford to place small stops at only outliers like the daily high or low, or weekly high or low, or monthly high or low.

    Take the average intraday wave size and extrapolate from the S/R zone where the stop should be, by placing it a few ticks greater then the average wave size during the day.
  5. No it does not have to do mostly with stops.

    Thus, price movements in the market is not mostly related to stops being hit.

  6. Joab


    Hence you have found the power behind simple support and resistance "areas".

  7. But then you are saying that new positions move price more?
  8. my dear paperboy,

    let go of this stop thing. it's not leading anywhere. when you come up with a sound strategy based on stop running let us know and you'll have our ever grateful respect :)

    unless you are a market maker or a pit trader, i doubt you will come up with one that WORKS in real life.
  9. feedback loops in regards to price action.
  10. :p Ok.. What is stop running?
    #10     Jun 23, 2007