Have you ever felt the pain of being stopped out of a trade only to see the market reverse? That’s what is referred to as a stop hunt. I know many of you will argue that stop hunting is a myth.
You see, trading is a zero sum game. When you loose out on a trade, someone somewhere profits; but who is this person? It is your liquidity provider. Bank dealers main objective is to make the trading business liquid. This is why it is referred to as spot forex. Your transactions are settled in milliseconds if not nanoseconds, on the spot.
Every financial transaction is two-fold. For every debit there must be a credit and vice versa. Same applies to trading in general. Every time you hit the buy button on your meta trader 4 or 5, the dealer sells to you and vice versa. I will not go into the details of liquidity provision right now maybe in future posts. So who are these dealers? Can you beat them? Can you think like they do?
This short video will try to explain how you can spot their stop hunt actions on a footprint chart. In order to have an edge as a day trader you have to anticipate reversals or short term pullbacks. Above all have a prudent, solid and robust risk/money management strategy.