i know people put stops in other places, but i'd bet that stops under a day's low or above a day's high (for shorts) are widely used. instead of trying to compete with everyone trying to get in and out at the right spots, would it be a good idea to just try and go for profits where many people might be taking losses? for example, short a stock that was up today and put an order to take profits under today's low. i'm just trying to think of ideas...
People only do it because it works overall. When too many do it the fills get terrible and the method wanes. It's never really failed to work (overall) though in my experience so I believe it would be a losing proposition.
I read your question wrong the first time. People actually enter long at the Highs and short at the Lows as well. These are high percentage turning points. People aren't only taking losses at these points.
I sometimes use buy stops to enter long positions just above the day's high. If I'm short a stock and the bid is below the current day's low I'll actually try to hit the bid (using bullets), and get the stock to print a new low, hopefully triggering stops or getting sellers to move down. Corey