Stop-Loss Hunting

Stop-loss and buy-stop orders are only a small share of total market liquidity. News can influence markets, but the article says this occurs through more complex channels than mechanical stop-loss hunting. Stop runs appear visually identical to absorptions and exhaustions on charts despite forming for completely different reasons. Retail stop losses are insignificant in volume compared with institutional liquidity. Institutional capital responding to macro catalysts dwarfs any coordinated stop-hunting activity by orders of magnitude. The article rejects the retail trading belief that price moves primarily to hunt stop losses. Treating stop-losses as the main driver of price action misunderstands market structure. The attribution of news-driven price spikes to stop-loss hunting is a common misconception, particularly in ICT trading communities. The stop-hunting explanation reflects a fundamental misunderstanding of what drives large currency market moves. Areas where stop loss theories predict high liquidity can show the lowest executed volume. The article rejects the idea that news releases trigger predictable stop-loss hunts regardless of news direction. A real stop run does not…