Stop loss hunting (also known as “stop runs”) refers to a situation in which someparticipants attempt to manipulate, or push, the of an and drive it to a level where other participants have set their .
When the price reaches these levels, these stop loss orders are triggered and What are value stocks? A value company is a company that app... More into A stop loss is an order that automatically closes your tra... More means that the those that have open trades, and are on the right side of the What is price? The price is the measure of the value of good... More movement, will profit even further.increases. This can present opportunities for some , because driving the
How does stop hunting work in practice?
For example, if a company hasworth $100, but it looks as though their value could increase further, many may buy the share and opt to set their stop losses just below $100.
If the price falls instead and those stop losses are hit, the high number of sellwill push the price even lower under continued selling pressure.
If you are in a position to estimate where those stop losses are and you have the power to influence What are value stocks? A value company is a company that app... More in What is a trade order? In trading, an order can be defined... More to drive the price down and into the likely stop losses that are placed there; profiting from this downward What are value stocks? A value company is a company that app... More move., then it would be possible to sell a large quantity of these
When stop loss hunting does occur, it is usually orchestrated by large institutions which are in a position to influence The direction of the price movement of a financial instru... More.
To learn more about stop losses, visit our lesson: