Stop hunting is a trading strategy that involves large traders pushing the market to trigger the stop-loss orders of other traders. The stop-loss orders force those traders out of their positions. Once those orders are cleared, the market reverses.
Stop hunting is a strategy that large (or “whale”) traders employ in financial markets like forex and crypto. When these whales see a cluster of stop-loss orders resting near the same price location, they push the market through the orders, forcing the participants out of their positions. This strategy becomes even more effective when leverage is involved, as the size of the market trades is magnified.
After an effective stop hunt is completed, the whales then begin to close out their position and the trend reverses. This is especially aggravating to retail traders, who are forced out of their positions — only to see the market reverse and trend in the direction they had initially analyzed.