I have read so many times that market makers "hunt" for stop losses and after they take them out they reverse the market. Additionally, everyone knows where key support and resistance levels are, so many stops tend to get placed right around the same levels, which become a self fulfilling prophecy. Does anyone have descent strategies they would like to share, especially in the overnight markets when we are all sleeping, especially if one is short a S&P option straddle and is constantly seeing their execution at the high or low of the overnight session One thing I have done with limited success if to use eminis instead of ES, and put in buy stops just a few points away from my sell stop and then another sell stop below my initial sell stop. For example, if i go to bed and ES is trading at 2950, i can put a stop in at 2929, with a reverse buy stop at 2935, and then another sell stop at 2928. Seems like if we get bad news, the 2929 gets taken out and we head much lower, so the stop was a good thing, but if market makers are hunting stops, if the 2929 gets taken out, and then 2927 is the overnight low, my reverse stop will get me flat at 2935, for a loss of 7 points. and my 2cd stop order at 2928 never gets hit I am sure there are far better strategies than this, but I have always been a fan of selling vol over the weekend, so hopefully the premiums make up for any losses i may have frm being chopped up a little bit
I’ve always just kept my stops where I know I’m wrong. As a daily swing trader this is usually 1-2 20 day ATR away. Usually leaves me room to get out before as well with a time stop. My entries are all based off pullbacks/consolidations. Might not work for yourself. Stop loss is my worst case, definetly wrong if it gets there, shouldn’t get chopped out.
I don't use them. Mainly because I know for sure that's how the MM'ers make money by stopping out the dummies. classic bait & switch.. If your strategy isn't good enough to hit TP or hold until the next signal in the opposite direction. While only losing a fraction of your investment, then it's not worth trading it live.
Thank you so much for the input....Prob a different strategy if/when short vol especially over a weekend, the ideal scenario is to wake up and find the market has not moved within a 200 point range or this weekend, a 800 point range, which its already close to doing