Stop Hunt

A stop hunt is a price move that pushes briefly through a level where many stop-loss orders are clustered, triggers them, and then reverses. The triggered stops become forced market orders — clustered sell stops below support provide liquidity for large buyers, and clustered buy stops above resistance do the same for large sellers.

For example, if BTC has bounced off $58,000 several times, many traders will place stop-losses just below it, around $57,800-$57,900. A stop hunt looks like a swift dip to $57,700 that fires those stops, followed by a sharp recovery back above $58,000, leaving stopped-out traders watching the move they anticipated happen without them.

Whether a specific wick was deliberate manipulation or simply large players executing where liquidity naturally pools is usually impossible to prove; the practical effect is identical either way. The lesson is about stop placement: obvious levels — round numbers, recent swing lows, widely watched support — are where stops concentrate and where sweeps occur. Traders adapt by placing stops beyond the obvious cluster with correspondingly smaller position sizes, or by waiting for a level to be swept and reclaimed before entering. A stop hunt is not evidence your analysis was wrong, but it is evidence your stop was where everyone else's was.