Stop Runs

A stop run is a market phenomenon where the price is driven rapidly to a level where a large volume of stop-loss orders is located. This is often executed by large market participants to trigger these orders, which then provide the necessary liquidity for their own large positions to be filled.

Stop runs frequently occur around swing highs and swing lows. In the context of cryptocurrency, these events can be extremely volatile and are often used to clear out over-leveraged retail positions.

After the stop-loss orders are triggered, the price often reverses sharply, moving in the opposite direction. Understanding stop runs is vital for traders to avoid getting stopped out of trades prematurely.

It highlights the importance of placing stop-loss orders away from obvious liquidity clusters.