General Trading Chat

[wisp]

Channel Low is 7750, will it go there

Yes it went

 

[Riskyman]

How did you predicted it ? Are you sitting inside the optical fibre that was carrying the orders :rofl: :rofl: :rofl:

Hahaha. Wish I was the one carrying the orders. Actually if you saw what happened..This was not a legitimate buy spike. Good spikes extend 30-40 points. Looks like this Price spike was created on small volumes to line up suckers. When breaks out everyone rushes to buy i.e there is buying interest. Large hand then can quickly unload his positions to those keen buyers without causing the prices to fall rapidly. This is exactly what stop hunting is

 

[amandeep86]

Hahaha. Wish I was the one carrying the orders. Actually if you saw what happened..This was not a legitimate buy spike. Good spikes extend 30-40 points. Looks like this Price spike was created on small volumes to line up suckers. When breaks out everyone rushes to buy i.e there is buying interest. Large hand then can quickly unload his positions to those keen buyers without causing the prices to fall rapidly. This is exactly what stop hunting is

RM ,

Nice Explaination ,Can we design a trading setup behind this theory to capture the fast order flow of Prices?

I think u are the best one to answer.

 

[lemondew]

After 2 good days for bulls. Its now back to bears. The shorters must have recovered what they lost last 2 days or atleast reduced their losses.


:clapping:

 

[rahulmalik]

RM ,

Nice Explaination ,Can we design a trading setup behind this theory to capture the fast order flow of Prices?

I think u are the best one to answer.

And for such a setup, all the orders have to be mandatory carried by Riskyman. But as we know, he is 'Risky' :rofl: :rofl: :rofl:

 

[Riskyman]

RM ,

Nice Explaination ,Can we design a trading setup behind this theory to capture the fast order flow of Prices?

I think u are the best one to answer.

Im not a market maker so I'm certainly not the best one to answer. However, I will share what I know about this topic. There is no rocket science about stop hunting. Its just the need of some market participants.

There is basically only two reason for market makers to hunt stops. 1. cause price momentum and 2. to enter/exit their positions. Most of the stop hunting happens at support/resistance levels, trend line breaks, round numbers(8000 on nifty?) or even day's high. Market makers know how we traders trade and they make good use of this for their benefit.

Price Momentum: lets suppose a stock is trading just lower than its resistance. lets say tata steel is trading now at 235 now but has resistance at 240 due to a double top formation. Market makers know that those people who have short positions will have placed their stops just over 240 lets say in a band of 241-243. Prices are driven up on small volumes where all these stops will hit. Short positions have to buy back to exit their shorts so a buying momentum builds up thus driving prices higher. All stops hit, market maker goes home with money. Trader is sucking his thumb.

Enter/Exit positions: when market makers want to buy positions, its very tough for them to do so without moving price significantly, therefore they indulge in stop hunting. In this case, lets assume a large hand wants to accumulate stocks. Lets also assume that price is trading closer to some key support level. Market makers will drive price down by first selling on low volume. A lot of people who have long positions would have placed stops just below this key support. When price breaks support, traders run to exit by selling their long positions. Now there is selling pressure and at this time, the market maker will execute his large buy order without driving prices higher and minimizing his slippages etc. You will often see that price breaks a key support and immediately reverse to go the other way. Same happens at resistance too i.e price breaks out and eventually goes the other way. We call it a breakout failure.

To answer your question, yes its possible to trade these setups. There are a lot of traders who survive only on stop hunting, specially in the forex markets where stop hunting happens every 5 minutes. Some of our own traders here on traderji are momentum traders without maybe the knowledge that they just hunted someone else's stop. The first set up is easy to trade, Buy a breakout or sell a breakdown around key support/resistance levels(mostly on daily bars). We all do this so no need to explain this further. The second one is a bit complicated but its extremely rewarding when traded on the daily charts. If a breakout/breakdown fails then you trade the opposite direction and enter a position at the breakout/breakdown level( of course with some buffer) For example. Lets say reliance has a triple bottom support at 900. Price breaks this support and goes down to 880. If price retraces immeditely back above 900, you can enter a position. Chances are that you will ride a nice upmove.

Lastly, all these things are for seasoned professional traders and large players who have deep pockets. The market spares no one and it can move against even a large player. So as small traders we should be trading our usual set ups than try some thing fancy. Like I said above, we all indulge in stop hunting unknowingly all the time. But to knowingly do it is assuming a lot of risks.

 

[Riskyman]

deleted .....

 

[praveen taneja]

11-Sep:
*Stk OI chg: (by highest %)
-Fresh Longs: AMTK, SHTF, BPCL, SRF, CEAT, CLGT, WPL, PWGR, UPLL, BATA, DEWH
-Fresh Shorts: BHE, ACEM, PTCIN, HZ, OINL, BOI, SAIL, SIB, MM, GDSP, TATA, COAL
-Short Cover: EIM, CENT, INFO, APTY, ANDB, STR, VOLT, DRRD, IGL, SIEM, PNB
-Long u/w's: SUNTV, HNDL, APHS, JSW, PIDI, VEDL, IBREL, AMRJ, UBBL, IRB, LT

*Top OI Gainers: by GD
BHE(+120%, -2.2%), AMTK(+40%, +54%), ACEM(+8%, -2%), SHTF(+5%, +1%), BPCL(+4.6%, +1.3%), SRF(+4%, +3.7%), CEAT(+3.7%, +1%)

*Top OI Losers:
EIM(-8.3%, +1.8%), SUNTV(-6.2%, -0.7%), CENT(-6%, +0.7%), HNDL(-4.6%, -0.5%), INFO(-4%, +0.6%), APHS(-3.6%, -2.6%), APTY(-3.4%, +0.4%)

*Nifty fut OI +0.75lk shs(+0.3%); Prem +0 vs +20
*BkNifty OI -1.07lk shs(-4.0%)
*IndiaVix @ 24.98 (+1.0%); ATM IVs @ 26.9% vs 26.3%
*Nifty Sep Opt OI Chg: in lks:
7200PE:-3.77
7400PE:-2.86
7500PE:+1.19
7700PE:-1.88

7700CE:-1.09
7900CE:+1.48
8000CE:+6.52
8100CE:+1.67
8500CE:+1.45
*Highest OI @ 7500PE:44.18 & 8000CE:45.15

 

[praveen taneja]

Iip data @ 4.2 expected was 3.6 previous was 3.8

 

[amandeep86]

Im not a market maker so I'm certainly not the best one to answer. However, I will share what I know about this topic. There is no rocket science about stop hunting. Its just the need of some market participants.

There is basically only two reason for market makers to hunt stops. 1. cause price momentum and 2. to enter/exit their positions. Most of the stop hunting happens at support/resistance levels, trend line breaks, round numbers(8000 on nifty?) or even day's high. Market makers know how we traders trade and they make good use of this for their benefit.

Price Momentum: lets suppose a stock is trading just lower than its resistance. lets say tata steel is trading now at 235 now but has resistance at 240 due to a double top formation. Market makers know that those people who have short positions will have placed their stops just over 240 lets say in a band of 241-243. Prices are driven up on small volumes where all these stops will hit. Short positions have to buy back to exit their shorts so a buying momentum builds up thus driving prices higher. All stops hit, market maker goes home with money. Trader is sucking his thumb.

Enter/Exit positions: when market makers want to buy positions, its very tough for them to do so without moving price significantly, therefore they indulge in stop hunting. In this case, lets assume a large hand wants to accumulate stocks. Lets also assume that price is trading closer to some key support level. Market makers will drive price down by first selling on low volume. A lot of people who have long positions would have placed stops just below this key support. When price breaks support, traders run to exit by selling their long positions. Now there is selling pressure and at this time, the market maker will execute his large buy order without driving prices higher and minimizing his slippages etc. You will often see that price breaks a key support and immediately reverse to go the other way. Same happens at resistance too i.e price breaks out and eventually goes the other way. We call it a breakout failure.

To answer your question, yes its possible to trade these setups. There are a lot of traders who survive only on stop hunting, specially in the forex markets where stop hunting happens every 5 minutes. Some of our own traders here on traderji are momentum traders without maybe the knowledge that they just hunted someone else's stop. The first set up is easy to trade, Buy a breakout or sell a breakdown around key support/resistance levels(mostly on daily bars). We all do this so no need to explain this further. The second one is a bit complicated but its extremely rewarding when traded on the daily charts. If a breakout/breakdown fails then you trade the opposite direction and enter a position at the breakout/breakdown level( of course with some buffer) For example. Lets say reliance has a triple bottom support at 900. Price breaks this support and goes down to 880. If price retraces immeditely back above 900, you can enter a position. Chances are that you will ride a nice upmove.

Lastly, all these things are for seasoned professional traders and large players who have deep pockets. The market spares no one and it can move against even a large player. So as small traders we should be trading our usual set ups than try some thing fancy. Like I said above, we all indulge in stop hunting unknowingly all the time. But to knowingly do it is assuming a lot of risks.

Thanks a lot for your reply...:clapping::clapping: