Some stop removals are so blatantly obvious it's hilarious... Personally. I like to fade them when I see them triggered during low volume. At other times when a lot of traders are watching the market the move tends to suck in too many speculators behind it to go for an immediate fade.
I wonder how much money it took to do that... Half a billion? A couple hundred million? I'm sure the banks know.
Anyway, let me explain the dynamics of a stop removal and how it makes money for those that do it.
If the market is chopping sideways building up stops on each side and a big player decides to remove the stops in low volume... They start bidding and push it until it triggers. They let it drift up/down for a bit and let people see the move and start getting sucked in. Then they start selling hard and fast...
They then try to push it down VERY fast because time is money when it comes to pushing the market away from it's supply/demand equilibrium. When the stops are hit to the downside they quickly begin to cover their short position created during the drive down... Then they move any remaining position steadily out of the market.
Don't just assume every single stop hit is going to fail. If the trend is in the direction of the move momentum can continue for a while. Also, early EU session when lots of traders are around there are plenty of people around to chase moves and drive them a bit farther.
It's hilarious... I swear every single day there are a ridiculous amount of buy and sell stops on each side of the market on the EU open... Don't these people know they are going to get taken out before the market is left to trend in it's natural direction?
I wonder how much money it took to do that... Half a billion? A couple hundred million? I'm sure the banks know.
Anyway, let me explain the dynamics of a stop removal and how it makes money for those that do it.
If the market is chopping sideways building up stops on each side and a big player decides to remove the stops in low volume... They start bidding and push it until it triggers. They let it drift up/down for a bit and let people see the move and start getting sucked in. Then they start selling hard and fast...
They then try to push it down VERY fast because time is money when it comes to pushing the market away from it's supply/demand equilibrium. When the stops are hit to the downside they quickly begin to cover their short position created during the drive down... Then they move any remaining position steadily out of the market.
Don't just assume every single stop hit is going to fail. If the trend is in the direction of the move momentum can continue for a while. Also, early EU session when lots of traders are around there are plenty of people around to chase moves and drive them a bit farther.
It's hilarious... I swear every single day there are a ridiculous amount of buy and sell stops on each side of the market on the EU open... Don't these people know they are going to get taken out before the market is left to trend in it's natural direction?