ok, you mean the market has dropped and the longs are being stopped right? and the question is why would I be wanting to buy then? when the market has been driven down exactly to take out those stops? Well that's when exactly the market usually flushes out the bears including the stops. that's why but, easier said than done though. Allbeit I do buy the tops and sell the lows too but not because stops are being hit, rather because I would see continuity of the trend.
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Stop hunting
- Thread starter paperboy
- Start date
Paperboy,Quote from Paperboy:The ultimate trading method? Nothing moves the market better than stops. But the trick is to know where there are enough stops to create a move in one direction and for how long they will work, right? How do we do that? Patterns, volume, time, cot reports...?
Quote from Joab:
Hence you have found the power behind simple support and resistance "areas".
You seem to have skimmed over the simple answer to your question. Typically stops will accumulate above res / below sup. Traders often try to run these during lower volume periods of time (days before/after holidays, during lunch, etc) & often use stocks w/ lots of short interest as it adds more fuel to the move. Stocks that have been locked in a defined trading range often accumulate these stops and can have powerful moves when they breakout.
It's not an ultimate strategy or anything spectacular like your statement: "Nothing moves the market better than stops" but rather another piece of knowledge to help hone your trading approach.
R
this is turning into some market efficiency theory thingy that y'all don't wanna mess with. peace
Quote from mde2004:
Oscar says his stops are run everyday and that's why he is losing money.
livewithoscar.com
Im not sure your interpretation of what Oscar actually meant by that comment is correct.
Running Stops is simply a term used by traders to perhaps describe a particular anomalous price action. Sometimes it can be attributed to "running Stops" ie for example.. their are many automated pro grammes triggered to do various buys and sells in any market. usually when popular indicators reach a trigger signal, the overall response of thousands of triggers being hit at the same time often leads to overextended price movements sometimes seemingly out of "character" or place. The same type of thing can be explained at serious down days, where we get day after day of price falls in a strongly bear market. Usually after several down days the price drop begins to gather pace because of an ever increasing number of of margin calls on accounts,... the mass liquidation of account holdings and positions that can also affect the price action of a market. (mass selling)
Its not a perfect explanation but thats a simplified example of whats going on
Let me know if Im wrong in any way traders..
regards
Paul
You are making a flawed assumption that there are enough stops in the market around a given price. I don't trade with stops nor do many bots. I would also think that large traders would never put a stop in market(ex 50,000 aapl) for fear of really getting screwed. My assumption could be wrong there though.