I've constantly come across the idea of stop hunting. If there is a detailed thread of this that has already answered these 2 questions, please feel free to direct me to it, as I have searched but didn't find anything regard 2 questions:
1. Who is hunting?
2. Who are they hunting?
1. I'm assuming the market makers are the only ones big enough to really push the markets around enough to hunt stops.
Which brings us to who are they hunting:
2. I'm assuming that retail traders are too small to bother with. I mean even if our stops are easy to pick off, is there enough volume to worry about us? So I'm guessing it's not us they're after.
Do commercials use stops? It would seem that if they wanted the actual currency, they wouldn't close out the trade just because price moved against their original price. So I'm assuming that it's not them.
So there are larger traders... hedge funds? Would they place stops at obvious levels like a retail trader? If they do, then it would make sense that maybe market makers would hunt their stops, as (again I'm assuming) their size of trades would make it worthwhile. That said, wouldn't they (larger traders) be more savvy to not place their stops at obvious levels? If they are savvy who is being hunted?
Thanks
Joe
1. Who is hunting?
2. Who are they hunting?
1. I'm assuming the market makers are the only ones big enough to really push the markets around enough to hunt stops.
Which brings us to who are they hunting:
2. I'm assuming that retail traders are too small to bother with. I mean even if our stops are easy to pick off, is there enough volume to worry about us? So I'm guessing it's not us they're after.
Do commercials use stops? It would seem that if they wanted the actual currency, they wouldn't close out the trade just because price moved against their original price. So I'm assuming that it's not them.
So there are larger traders... hedge funds? Would they place stops at obvious levels like a retail trader? If they do, then it would make sense that maybe market makers would hunt their stops, as (again I'm assuming) their size of trades would make it worthwhile. That said, wouldn't they (larger traders) be more savvy to not place their stops at obvious levels? If they are savvy who is being hunted?
Thanks
Joe