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Stop Loss HuntingInstitutional investors have a profound impact on financial instruments prices because of their large volume trading activities. They can greatly impact the price of financial instruments, however making a material impact and hence decreasing liquidity to the point where there may be no one to take the other side of the trade is not something they desire. To fill their large in size orders with better price levels, Institutional investors need liquidity, they cannot just enter a trade at once, but they split trades over time and slowly have to build a position by hunting for liquidity. One of their strategic approach and the best way to get liquidity without making a material impact of the price and get filled in better price levels is Stop Loss Hunting . A stop-loss order is an order placed to buy or sell a financial instrument when it reaches a certain price with the aim to limit loss on a position or protect profits. Where do we usually place our stop orders? For a long trade example, usually we set them just below a support level, a trend line, a longer-term moving average, previous day low or a specific ATR percentage etc, which are highly predictable. Institutional investors simply need to trigger stop loss orders of thousand of traders and since a key level is borken new traders joins by entering positions, making them take trades in the wrong direction, which as a result creates a huge supply with enough liquidity to absorb Institutional investor's demand with better prices Some examples Stop Loss houting can be observed frequently
FX_IDC:XAUUSDEducation
by dgtrd
212
STOP LOSS: Your saving angelWhat is a stop loss? Why do i need to use it? Why should i listen? Stop loss is designed to limit an investor's loss, it is built FOR YOU. It's like fighting a boss without a weapon, yet there are multitudes of weapon ready to be used for you beside you. Why should i use a stop loss when my liquidation is far? MARKET VOLATILITY IS AT THE HIGHEST RIGHT NOW, not only cryptocurrency, but also stocks and commodities. The world is in shambles, and with 90% of the world experiencing a loss, we want to be in that 10% profiting from the volatility. I won't explain further how to set stop losses in binance or huobi, you can always do a simple google search or watch 2 minute videos on youtube. Literally. Sorry i cannot place any links in here. I know this is short, but long posts are generally skipped by most of the newbie traders like me. Lets hope we all can be millionaires soon. May you all and i be blessed with good luck.
Education
by cryptoneubie
3
CTI two recent zones of entry plus one ATM with TP and SL On the chart you can see two executed zones of entry with TP and SL areas, on RSI indicator you can see that when possibility to enter the market opens, RSI tends to flatten itself. Every recent point of entry has it and at the moment you can see it happening again. Also if you look closely on a more visual information from Trend Ribbon, you can see similarities in entry zone appearance at the middle of a local downtrend. I've laid out for you expected TP and SL areas with realistic expectations of growth from 0.07$ up to 0.09$ with expected execution time period around two to three and a half days, judging by previous periods.
by jjlung
⚡️ Understanding Breakout Traps ⚡️If we see a pattern form that retail likes to trade, It is highly likely that this pattern may get manipulated. The reason these common patterns get manipulated is because of liquidity forming. Banks want to make sure they can create enough liquidity for themselves to get positioned nicely in the market. They do this by driving the price up/down into stop loss areas. To avoid being caught out we need to sit on our hands, wait for the stop loss hunt to occur before we go-ahead with our initial position bias.
Education
by AlkalineFX
NVDA Update, Able to reach to next resistance zone at 717-748?NVDA is doing great continuously making higher highs and higher lows in H1 time frame. It seems NVDA has defeated first proposed resistance zone and now is going to attack next one at 717-748 which is a broad one. Stochastic indicator in Monthly, Weekly and daily time frame is in overbought zone which suggests that going long is too risky now. For those who has NVDA shares my recommendation is to adjust their stop loss continuously and carefully. Good Luck everyone.
NASDAQ:NVDA
by SaeedSajedi
Median Has To Break!!Once the Median breaks, then we can hope for another Up Trend! Right now we have a good support on 0.25 Pitchfork (Orange Line) But if 0.25 Breaks... Then we might experience another huge fall! So keep your Stop losses a bit bellow the support (best support is the lowest low that happened recently)! leave your stop bellow it so if the price hit the support and bounced back up, you don't miss out! Usually when we see a huge fall and MACD lines drop bellow the histogram, they have to try to go back up above it! So im confident, we can expect a rise soon. but im not a god so be extra cautious and leave that stop loss there for your protection!! There are lots of good news coming for the whole market and they have to have some good effect on it! Best of luck! Be Profitable!
Short
by jghanavizi
BTCUSD IS IN VERY DANGEROUS AREABtcusd is in very important area. If Btc will break up and do re-test to red resistance with big volume , We can see 47.000. This is good scenario. There is flag formation; Also ıf Btc will reject to red resistance, We are entering supper bearish season. For Now? Now I Usdt since 36.000-37.000. And I am waiting result; Up Re-Test or Reject Resistance? Wait and see.. Thanks for your attention. You can ask everything, I am waiting. Please click like button and Appreciate my hard work. Must follow me for latest crypto real time updates.
B
by abdullahclz46
how to risk smartly? position sizing, risk n reward, SL n TP 👌Risk refers to the probability of a negative event happening in your activities; an event that goes contrary to your intended outcome. Risk is part and parcel of the cryptocurrency trade. It is the chance of an undesired outcome on the trade, which translates to making losses. For instance, a 50% risk on a short position simply means that there is a 50% probability that the Bitcoin price will rise, resulting in a loss on your part. Today, we take you through the simple rules to follow when managing risk in crypto trading. Types Of Risk The crypto trading world is exposed to four main types of financial risks: Credit Risk This risk affects crypto projects. It is the probability of the parties behind the crypto project failing to fulfill their due obligations. Credit risk is mostly attributed to theft and fraud in the crypto market. A good example is the hacking of Binance in 2018, which led to over $40 million loss. Legal Risk Legal risk refers to the probability of a negative event occurring with respect to regulatory rules. For instance, a ban on cryptocurrency trading in a specific country. A practical example of legal risk is when the states of Texas and North Carolina issued a cease-and-desist order to Bitconnect cryptocurrency exchange due to suspicion of fraud. Liquidity Risk Liquidity risk in respect to crypto trading refers to the chance of a trader being unable or incapacitated to convert their entire position to fiat currencies (USD, YEN, GBP) that they can use in their every-day spending. Market Risk Market risk refers to the chance of coin prices moving up or down contrary to your desire in an open position. Operational Risk Operational risk is the chance that a trader is unable to trade, deposit, or even withdraw money in their crypto wallets. Main Risk Management Strategies The rule of thumb in crypto trading is: “Do not risk more than you can afford to lose.” Given the gravity of risk in crypto trading, we generally advise traders to use not more than 10% of their budget or monthly revenue. Also, trading with borrowed money is not advisable as it puts them in a credit risk position. Risk management strategies can be broadly categorized into three: risk/reward ratio, position-sizing, as well as stop loss & take profits. 1. Position Sizing Position sizing dictates how many coins or tokens of cryptocurrency a trader is willing to buy. The probability of realizing great profits in crypto trading tempts traders to invest 30%, 50% or even 100% of their trading capital. However, this is a disruptive move that puts you at serious financial risks. The golden rule is: never put all your eggs in one basket. Here are three ways to achieve position sizing. Enter Amount vs Risk Amount This approach considers two different amounts. The first involves money you are willing to invest in every single deal. We advise traders to look at this amount as the size of each new order they take, regardless of its type. The second involves money at risk, i.e. the money that you stand to lose in case the trading fails. This is how you define your enter amount: A = ((Stack size * Risk per Trade) / (Entry Price – Stop Loss)) * Entry Price Let’s say we wish to purchase BTC with USDT with a target of $13,000. Our parameters would be: Stack Size: $5,000 Risk per Trade: 2% Entry Price: $11,500 Stop Loss: $10,500 Our enter amount would be: A= ((5,000 * 0.02) / (11,500 – 10,500)) * 11,500 = 1,150 The ideal amount to invest in this deal is $1,150 or 23%. However, due to our Stop Loss, we only risk 2% as it will stop the trade once it reaches the determined level. Risk trading in cryptocurrency Elder’s “Sharks” and “Piranhas” This concept of position sizing relates to diversifying your investments. Dr. Alexander Elder, who is credited with the concept, suggests two rules: Limiting every position to 2% risk. Elder compares risk to a shark bite. Sometimes you would wish to risk a huge amount, but the risk would be huge and catastrophic as a shark bite. Limiting trading sessions to 6% per session. In a losing streak, you may end up spending everything you own little by little. Elder compares this risk to a piranha attack, which takes small bites of its victim until it consumes it all. Following Elder’s sharks and piranhas approach results in no more than three open positions per 2% each or six ones per 1%. Limiting results in reverse compounding; losses get smaller and smaller with each subsequent loss you make. Kelly Criterion The Kelly criterion is a formula developed by John Larry Kelly in 1956. It is a position sizing approach that defines the percentage of capital to bet. It suits long-term trading. A = (Success % / Loss Ratio at Stop Loss) – ((1 – success %) / Profit Ratio at Take Profit) Using the previous example, the features would be: Stock size: $5,000 Invested Amount: $1,150 Success %: 60% Entry Price: $11,500 Stop Loss: $10,500 Loss Ratio: 1.10 Take Profits: $13,000 Our result would be: A = (0.6 / 1.10) – ((1 – 0.06) / 1.13) = 0.19 This means you should not risk more than 19% of the entire capital of $5,000 for you to arrive at the best possible outcome in a series of deals. 2. Risk/Reward Ratio The risk/reward ratio compares the actual level of risk with the potential returns. In trading, the riskier a position, the more profitable it can get. Understanding the risk /reward ratio enables you to know when to enter a trade and when it is unprofitable. The risk/reward ratio is calculated as follows: R = (Target Price – Entry Price) / (Entry Price – Stop Loss) From the previous illustration: Entry price: $11,500 Stop Loss: $10,500 Target price: $13,000 Our ratio would be: R = (13,000 – 11,500) / (11,500 – 10,500) = 1.5 or 1:1.5 A ratio of 1:1.5 is good. We advise traders not to trade with a ratio lower than 1:1. 3. Stop Loss + Take Profit Stop Loss refers to an executable order which closes an open position when a price decreases to a specific barrier. Take Profit, on the other hand, is an executable order that liquidates open orders when the prices rise to a certain level. Both are good approaches to managing risk. Stop Losses save you from trading in unprofitable deals while Take Profits let you get out of the trade before the market can turn against you. You can make use of Trailing Stop Losses and Take Profits which follow the rate’s changes automatically. Such a feature, however, isn’t available at the majority of crypto exchanges. Fortunately, with crypto terminals like Superorder, you can set your Trailing Stop Losses and Take Profits right from the terminal. Winning Strategies Accept Failures Risk is part and parcel of trading. Besides, we cannot eliminate it but only manage it. You should, therefore, accept your losses and rely on plan-based decision making to realize profits in future trades. Consider Fees New traders often do not know the fees that come along with trading. Such include withdrawal fees, leverage fees, etc. You should consider these in your risk management. Focus on the Win Rate Risks will always be there to discourage you from trading. However, focusing on the number of times you win helps to develop a positive attitude in trading. Measure Drawdown This refers to the total reduction of your initial funds after a series of losses. For instance, if you lost $1,000 from $5,000, your measure drawdown is 10%. The higher the amount, the more you would need to inject into a trade for it to recover. As Dr. Elder advised, stick to a 6% risk limit. Please click LIKE button and Appreciate my hard work. Must follow me for latest crypto real time updates. Thank you.
NYSE:TWTR
by BTC-fire