Stop-Loss Hunting

Stop-loss hunting is a market manipulation tactic where large traders push the price of an asset toward levels where many retail traders have placed stop-loss orders. By triggering these orders, the manipulator creates a temporary surge in volume that forces the price further in a specific direction.

Once the stop-losses are triggered, the price often reverts to its original trend. This allows the manipulator to accumulate or distribute assets at more favorable prices.

In highly leveraged crypto markets, stop-loss hunting is prevalent because many traders use similar technical indicators. It highlights the importance of understanding behavioral game theory in trading.

Being aware of this practice helps traders avoid placing stops at obvious support or resistance levels.