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Stop Hunting Strategy

  • #1
  • First Post: Edited 5:56pm May 13, 2008 5:20am | Edited 5:56pm
Let's just cut to the chase here. Now that I think about it, I'm surprised I've never seen this on here before - a thread specifically discussing stop hunting strategy.

Those of you that read my journal know I've taken a real job. It sucks, but they pay me. 'Nuff said.

The only way I've ever made consistent money is to watch my trades, and right when I get that, "gee, I'm in the money pretty good" feeling, TAKE THE PROFIT. Which means that I'm back to square one if my life is consumed by work, getting ready for work, resting from work, etc. because I can't trade when the time is right, I have to trade when I have time, and have very little.

So, the strategy....

I wanna go short the G/J right now. It will probably continue on down. Maybe. If I'm gonna trade, I gotta put the trade on now and leave until this evening. Hmmm. I've been trying quite a few of those, and, over and over, come back to find I was stopped out. I've tried trading this way ever since I knew I'd be working a job, and I lose about 80% of these trades. Hmmm.

So I thought, "if I went in now, where would this trade get stopped out?" And I put a limit sell just this side of there, with a 100 pip stop and a 200 pip t/p. If I don't get the trade, no big deal, I probably wasn't going to trade today anyway. If I get stopped out, no big deal, I would have anyway, if I'd have put the trade on now.

It's kind of a gamble, really. "Experiment" might be a better word. Should experiment on demo, probably. But it's a very small trade, and we'll see what happens.

I know most all of you have thought about this kind of thing at one time or another, and I welcome any comments. Maybe together we can come up with something of merit.
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  • #2
  • May 13, 2008 8:50am May 13, 2008 8:50am
No offense, but this is not a strategy, it's a feeling.

To trade on feelings - I don't know it has not worked for me and it has cost me a lot of money.

Now I have it all written down, with 5 mandatory criterias for me to even enter the trade. If any of these is not fulfilled, I do not enter a trade. I do trade more long term, but short term was not my thing...

But as far as I understand you presume that you current feeling to trade is wrong, and you will enter at the value at which you get stopped out if you took this trade now.

Interesting, let us know how you do.

Regards,
Greed and impatience are our greatest enemies.
  • #3
  • May 13, 2008 5:54pm May 13, 2008 5:54pm
Alright, well, I'm not going to go into all the reasons why I take a trade, there are lots of reasons and you can find a million of them all over this forum.

The point that may have been missed is that I have to sleep through the night, and today I obviously slept through the entry.

So the choices are, to show up when the party's over, and it certainly was over when I posted this morning, or put in a limit for a better entry, or forget the whole thing.

If you've watched the G/J as much as I have, and have gotten stopped out as much as I have, then you know the beast's habits fairly well. And I "FELT" like it would go back up to resistance one more time, and probably 30 - 50 pips above, actually. So I put in a trade where I was sure it would get hit, and a stop where I was reasonably sure it wouldn't. I've been thinking about it all day at work, thinking it should have been higher.

Anyway, it might have been a good entry, time will tell. I'm going to have another beer, read the paper looking for a place to live, and get some sleep.
  • #4
  • May 13, 2008 8:42pm May 13, 2008 8:42pm
for all that matters, the price could have gone to your stops if it wanted to, and you becomes the hunted. this is not stop hunting its gut hunting, and only the brokers could do stop hunts. You need to visually know where the hard stops are in order to hunt them, and it takes alot to move these price from one point to another just so that they could trigger a set of orders.
  • #5
  • May 14, 2008 2:05am May 14, 2008 2:05am
Alright, people.

If you don't have anything to add, on topic, move on please.

If you don't get it, move on, please.
  • #6
  • May 14, 2008 3:53am May 14, 2008 3:53am
it doesnt take a genius to know where the stops are - and a stop hunting strategy is viable not to hunt the stops yourself, but to ride on the tails of those big enough to hunt them.

My own strategy for hunting stops goes like this.


Look for a trend that has stalled for a while - what was the direction of the trend prior to the stall?

lets say it was long

then price stalls for a good while, like 2 days on a 30 min chart stuck in a range. The longer that range lasts the better as the more stops will be building below the range.

look for the range to start moving up then place entry orders below the range by about 10 pips.

what usually happens is that you get a pop high and then prople enter, orders enter etc long - they put even more stops below the range - price retraces to below the range to take out the stops - yours to enter long is one of them and you get taken in. as the stops are hit price may drop somewhat up to 25 pips from the range - if it does more than this then beware. mostly you'll then get the pop high again for you to take your money.

Voila the stop hunt.

I prob get to play this maybe twice a month so it's not really viable for a full on strategy but all pips help.
https://linktr.ee/Soultrader
  • #7
  • May 14, 2008 3:51pm May 14, 2008 3:51pm
Thanks, Soultrader! That's what I'm talkin' about.

How many of us have entered long on that pop above the range, and placed our stops below the range (everyone raise our hands, that's exactly what the books and courses teach us to do) only to get stopped out?

So you might miss the trade entirely, but if not, you've got an excellent entry price. That's the idea.
  • #8
  • May 14, 2008 4:08pm May 14, 2008 4:08pm
Quoting blueruby
Thanks, Soultrader! That's what I'm talkin' about.

How many of us have entered long on that pop above the range, and placed our stops below the range (everyone raise our hands, that's exactly what the books and courses teach us to do) only to get stopped out?

So you might miss the trade entirely, but if not, you've got an excellent entry price. That's the idea.
I kinda like this idea
  • #9
  • May 19, 2008 12:14am May 19, 2008 12:14am
Quoting soultrader
it doesnt take a genius to know where the stops are - and a stop hunting strategy is viable not to hunt the stops yourself, but to ride on the tails of those big enough to hunt them.

My own strategy for hunting stops goes like this.


Look for a trend that has stalled for a while - what was the direction of the trend prior to the stall?

lets say it was long

then price stalls for a good while, like 2 days on a 30 min chart stuck in a range. The longer that range lasts the better as the more stops will be building below the range.

look for the range to start moving up then place entry orders below the range by about 10 pips.

what usually happens is that you get a pop high and then prople enter, orders enter etc long - they put even more stops below the range - price retraces to below the range to take out the stops - yours to enter long is one of them and you get taken in. as the stops are hit price may drop somewhat up to 25 pips from the range - if it does more than this then beware. mostly you'll then get the pop high again for you to take your money.

Voila the stop hunt.

I prob get to play this maybe twice a month so it's not really viable for a full on strategy but all pips help.
I've figured out for myself this:

When I see some nice S/R I'm not placing any order, but waiting. When price goes near I'm trying breakout. When one occure - you should see two 5min candles 10-15 pips long in your favour.
If I opened position and price on 5min is ranging around SR for 15-20 min I run out or even enter back the trend. It works quite often. It's nothing new, but it looks like no one knows that around...

So
Breakouts are fast - so you have no time to enter if not waching price at the moment,
bounces go slow, so everyone can enter. Even those chaps that didnt place their orders.

I would play same dirty game if had my own bank...
  • #10
  • May 19, 2008 9:02am May 19, 2008 9:02am
its good but not for trades just for brokers
  • #11
  • May 22, 2008 5:31am May 22, 2008 5:31am
At the left of the chart you have a bounce off support, then another bounce occurs, then on the third, it breaks down, takes out the stops, and up she goes.

Then it breaks through resistance, pulls back, goes up, pulls back again (resistance became support), then breaks down, takes out the stops, and, up she goes.
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  • #12
  • May 22, 2008 6:05am May 22, 2008 6:05am
blueruby, this may be slightly off topic, but I think you'll find it interesting so please read on .

If you can consistently lose using a repeatable strategy, then you can consistently win. You say that your stop losses get hit 80% of the time which must be frustrating, but look at the bright side: you have found something that consistently happens in the market and any time you find something like that you can exploit it (I'm assuming here that the 80% is something you have calculated over a large number of trades and not just a number you're throwing out). Instead of looking for a new strategy, why not just use the exact opposite of your current strategy. It looks as though you stick to the 1:2 Risk:Reward ratio so you will have to reverse this, but with an 80% win percentage who cares? Your mathematical expectancy will be well positive and that's all that really matters when choosing a strategy. What do you think?
  • #13
  • May 24, 2008 7:11am May 24, 2008 7:11am
Quoting fierceman
blueruby, this may be slightly off topic, but I think you'll find it interesting so please read on .

If you can consistently lose using a repeatable strategy, then you can consistently win. You say that your stop losses get hit 80% of the time which must be frustrating, but look at the bright side: you have found something that consistently happens in the market and any time you find something like that you can exploit it (I'm assuming here that the 80% is something you have calculated over a large number of trades and not just a number you're throwing out). Instead of looking for a new strategy, why not just use the exact opposite of your current strategy. It looks as though you stick to the 1:2 Risk:Reward ratio so you will have to reverse this, but with an 80% win percentage who cares? Your mathematical expectancy will be well positive and that's all that really matters when choosing a strategy. What do you think?
I was thinking the same thing yesterday, and have thought it before during losing streaks. Not sure how to "fool" myself though into doing the opposite of what I think.

I'm probably nearer to 100% now. But I'm making 1 - 2 trades per week. Looking at charts for a few minutes when I have time, then making a call. Not really into it, when it comes right down to it.

So, (duh) I think my only choice is to go to weekly/daily charts, no lower than 4 hour. Maybe should start haunting the J16 thread in the evenings, I think they're mostly working day jobs, get on in the evenings, and place trades on the D1 / W1.
  • #14
  • May 24, 2008 9:15am May 24, 2008 9:15am
Quoting blueruby
I was thinking the same thing yesterday, and have thought it before during losing streaks. Not sure how to "fool" myself though into doing the opposite of what I think.

I'm probably nearer to 100% now. But I'm making 1 - 2 trades per week. Looking at charts for a few minutes when I have time, then making a call. Not really into it, when it comes right down to it.

So, (duh) I think my only choice is to go to weekly/daily charts, no lower than 4 hour. Maybe should start haunting the J16 thread in the evenings, I think they're mostly working day jobs, get on in the evenings, and place trades on the D1 / W1.
Hi Blueruby,
It is very interesting that ones unalterred approach to the market is often right, but the timing is wrong. What I mean right, is the longer perspective and an educated guess that such instrument shall go up, in a day,week or a month. There is therefore a kind of satisfaction that one has been right, and on the other side, a desperation of a diplited account. This satisfaction keeps one hoping that one day things would workout better. It is perfectly possible to be right in one timeframe, but wrong in the timeframe that one is trading, especially if it is a daytrading activity using 5/15min timeframes. At these shorter timeframes the markets seems to be wired in a way that is strange to the majority of ordinary people. Thanks to it the majority of the markets exist, to award the ones that are prepared to think and act differently to the crowd mentality. There is a complex relation of fear, greed and the one's need to be right. Fear has two sides, good one and destrucive one. I diminish the sence of destructive fear by knowing exactly the amount of my maximum loss on a given trade, and I do not loose my energy to satisfy my desire to be right in relation to my opinion of the market direction. Greed, who does not have it. I am satisfied with whatever the market is offering to me, knowing that I am very able to undermine my profits by not allowing the full benifit the market has at its disposal on a given trade. In trading, the discipline is by far more in demand than a complicated trading system in order to continue to be a profitable trader. On this forum there are some very worthwile threads to study in order to become more satisfied by the market.
Best wishes, and many good trades,
2be
Make sure losses are small and profits are bigger!
  • #15
  • May 26, 2008 5:30am May 26, 2008 5:30am
2be, great post, that certainly fits in with the topic.

You can see on my last chart post what happened to those that were "thinking like the crowd". Who among us hasn't put a stop 20 pips beyond support or resistance, lost our trade, only to watch price shoot in our direction?

So, maybe this whole idea is a "guessing game" hit-or-miss scheme for a better entry. Maybe it should make us think about how we set our stops.

It's difficult to unlearn something once you get it fixed in the mind one way. So one makes the same mistakes over and over.

It's just another example of the basic fact that you have to react to what the market is doing, not what you think or hope it will do.
  • #16
  • May 31, 2008 7:54am May 31, 2008 7:54am
Only the strongest survive.
Fuck Forex Factory
  • #17
  • Last Post: Jun 3, 2008 3:53am Jun 3, 2008 3:53am
I just got up and here's what I see.

Will they run the stops one more time today?

Buy now? 50 pip stop or put it below support? Usually if the E/U goes against you 50 pips, you're wrong.

Or, limit order near or below support?

I think I'll try both, small positions, just an experiment.
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