Stop hunting is a very important concept in trading of anything. When you buy a goods or service, you want the buying price to be as low as possible. How could you get the cheapest price ? You must buy it from people who really need to sell it to get quick money from you. In stock or forex markets, you want to buy from people who are forced to sell their holdings to cover the damage due to their bad investments.
On the left hand side of EURUSD pair in 1 minute chart above, many investors expected that the market was about to turn upward. So they bought the pair and set up their stop loss just below the price bars as shown in the chart with $ signs. This was opposite to what the market makers thought. They had a huge amount of buy orders to be fulfilled instantly and they had to have positions in their hands and they need to buy those positions at cheap prices. What they did was using some money to shift the price down very quickly to trigger the stop losses of other buyers ($$$$$$$$$$$$). So those buyers unwillingly sold out their positions to the market makers. The market makers kept buying until the supply dried up and the price slipped higher. When the public spotted this price appreciation, they joined buying the pair driving the price even higher. Who were selling positions to the public ? They were the market makers that supplied the positions to the public. This happens all the time in every markets of everything.
Investors who want to learn how to read market stories from the charts can consult me (Dr. Nimit Chomnawang) at [ m.me/nimit.chomnawang ].
