Stop Hunt
Price movement that triggers clusters of stop losses before reversing.
Full Definition
A stop hunt occurs when price moves specifically to trigger stop-loss orders clustered at obvious technical levels before reversing in the opposite direction. This phenomenon happens because large traders need liquidity to fill their positions, and retail stop losses provide that liquidity. Recognizing potential stop hunts can help traders avoid premature stop-outs and identify high-probability reversal zones.
Example
Price breaks below a clear support level, triggering stops from traders who went long. After sweeping these stops, price quickly reverses and rallies strongly. Traders who recognized this as a stop hunt could have entered long after the sweep.
Related Terms
Liquidity Pool
Areas where stop losses and pending orders cluster, creating tradable liquidity.
Liquidity Grab
A quick move to take out stops before reversing direction.
Support
A price level where buying pressure prevents further decline.
Resistance
A price level where selling pressure prevents further rise.
Apply Your Knowledge
Put this concept into practice with our free trading tools.