Stop Run

A Stop Run is a market movement that specifically targets the stop-loss orders of retail traders. These orders are typically placed just below support or just above resistance levels.

When the market moves to these levels, it triggers a cascade of orders, which creates the liquidity needed for large players to fill their positions. This is a common tactic in cryptocurrency and derivative markets where volatility is high.

The price often reverses sharply after the stop run, leaving those who were stopped out at a loss. Understanding stop runs is crucial for traders who want to avoid being caught on the wrong side of these moves.

It involves recognizing where the majority of retail stops are likely to be located. By anticipating these moves, traders can either avoid the market during these times or position themselves to take advantage of the reversal.

It is a key aspect of behavioral game theory in financial markets. A stop run is essentially a transfer of wealth from less experienced to more experienced market participants.