Trader's Glossary

Stop Hunting

Stop hunting, or stop-loss hunting, is the practice of forcing retail traders out of their positions by causing price action to rise or fall to a point where their stop-loss levels have been set. This leads to stop-losses being triggered and unprofitable market exits which other investors can then take advantage of. It is a strategy primarily employed by large financial institutions because they have the capital to buy or sell the large amounts of currency necessary to affect market prices. Stop hunting is made possible by the fact that traders normally set their stop-loss levels at certain key points such as: support and resistance levels, popular moving averages, Fibonacci Levels and round numbers.