Step Anticipate Hunting Stop Loss
Hunting Stop Loss (stops) has become a common term among traders and forex investors. But we will discuss not from the broker side, because it is useless. Brokers think this is legitimate. Precisely we as a trader must have anticipation step hunting stop loss with the same mindset but trader’s point of view.
Taking anticipation hunting stops can use a very simple setup, no more than a price chart and one indicator. Here are the brief settings. Let’s use the graph with one hour clock timeframe (H1), mark 15 points from both sides of the “00” round number. For example, if EUR / USD approaches 1.2500, trader will mark 1.2485 and 1.2515 with horizontal line or rectangle box on chart. The 30-point region is known as the “trading zone”, where traders have a high profit probability when the price enters the area.
When the price approaches the “00” level, Trader will try to target or place a stop in the area so that it converges. But because of the decentralized forex market, no one knows the exact number of stops at this “00” level, but traders expect that the size is large enough to trigger further liquidation of positions. If a series or set of stop loss orders is triggered it will push the price farther toward it. Have you got it?
Well, in case of setup buy, if the price in EUR / USD creeps up to the 1.2500 level, the trader will buy the pair with two lots as soon as it passes the 1.2485 level. The order stops on the trading are 15 points below because this is a tight trading momentum. If the price does not start immediately, the setup possibilities fail, stops tight. The target profit on the first lot is based on the initial risk amount or about 15 points at the 1.2500 level. As the price continues towards 1.2500, the trader will move the stop at the second lot to the point of break even (BEP) to lock in profit. The target of the second lot will be twice the initial risk (2×15 points) or at the level of 1.2515, allowing the trader to exit to liquidate his position.