The definition of ‘hunt’
Stop hunting is a strategy that attempts to force some market participants from their positions when the price movement of the asset to the level at which many people decided to set their stop-loss orders. Triggering of many stop losses generally leads to high volatility and may present a unique opportunity for investors who seek to trade in this environment.
Breaking down the ‘hunt’
Understanding that the price of an asset can experience sharp moves, when many stop losses are triggered can be useful when searching for potential trading opportunities. For example, assume that ABC company’s stock is trading at $50.36 and looks like it may be heading lower. It is possible that many traders will place their stop losses just below $50, to $49.99, so they can still hold on to the stock and promotion, as well as limiting the downside. If the price falls below $ 50 as traders expect a flow of sell orders, as many stop losses are triggered. This will push the price lower and give some traders the opportunity to profit from the decline.
To stop the hunting and stop loss
Stop-loss orders types of orders that are a little more complex than the traditional market order or a limit order. In the stop loss the investor will place an order with a broker to sell securities at a certain price. For example, if you own shares of XYZ company Inc. install currently trading at $70, and you want to hedge against the background of a significant reduction, you can enter a stop-loss order to sell your ABC company at $68. If XYZ falls below $68, your stop loss is triggered and becomes a market order. Holds your ABV will be eliminated at the next available price. Stop loss orders are designed to limit investor losses to long positions. In addition, a stop loss can protect a short positionas well.
To stop the hunting and trading strategies
Stop hunting is a form of trading strategy. Apart from a few basic investingthe city , which relies on the internal characteristics of the company, including income, profit, profitability, and reputation management — trading strategies focus on timing and technical indicators such as double tops and charts of the trajectories. Trading strategies rely on a set of rules that define certain conditions that must be met for entry and exit to occur. Such features may include filters for the size of the company, historical results, and triggers.