Stop Hunting – “Put your entry where the masses put their stops”

What Stop Hunting Looks Like in Real Time

In the companion video, we walk through a live example of stop hunting inside the Russell. Two automated orders triggered during the session, both on the short side. The first was a bounce off the aggressive models. The second was a play off the same retest into the close. Both trades came from automated scripts designed to enter with minimal manual intervention.

Identifying the Weak Market

Before placing any trades, we used the multi-timeframe Market Pulse to compare relative strength across the four major index futures. The process: load the Market Pulse labels on 15-minute charts and higher, then compare colors across the S&P, Dow, NASDAQ, and Russell.

The Russell showed orange labels from the daily through the weekly timeframe, suggesting bearish territory. The 2-hour was already bearish. The Dow looked similar. The NASDAQ and S&P, by contrast, showed longer-timeframe trends leaning more bullish. This comparison made the Russell and Dow the preferred short candidates that day.

The Stop Hunt Setup

After the automated script entered short on a momentum cross with a retest entry, price drifted higher. The high of the move reached $2,252.0. What happened next is a textbook stop hunt: a red candle pushed to $2,252.1, exactly one tick above the prior high.

For traders who went short near that initial level, their stops would logically sit above $2,252.0. The one-tick push above that level triggered those stops before price resumed the downward move. This is the classic stop hunting pattern: take out the obvious stop level, then continue in the original direction.

The Entry Concept

There is an old trading adage: enter where the masses put their stops. The idea is straightforward. If most traders who are short have their stops above the prior high, and price pushes just above that level, the stop run creates a burst of buying that quickly exhausts itself. At that moment, the short side has been flushed out, and you can enter short at a better price with the stop hunters having already done their work.

In this Russell example, the follow-through after the stop hunt was limited. Price did not break below the day's lows as expected. Buyers held near the lower end of the range. The trade concept was valid, but the outcome was modest.

How to Spot Stop Hunt Candidates

The Market Pulse comparison across index futures is the first filter. Identify which markets are weakest (most bearish labels across timeframes) and which are strongest. Focus your short-side stop hunt trades on the weak markets.

Next, look for price action where a prior high or low is clearly defined. The tighter the cluster of stops around that level, the more likely a stop hunt will occur. When price pushes just beyond that level (one or two ticks) and immediately reverses, you have your signal.

For those building automated trading scripts, this pattern can be codified: wait for a momentum trigger, then place the entry order a few ticks beyond the prior high or low. The automation removes the emotional component of watching price push against your expected direction.

Frequently Asked Questions

What is stop hunting?

Stop hunting is when price pushes just beyond a key level (like a prior high or low) to trigger stop-loss orders clustered at that level, then reverses. In this example, the Russell pushed one tick above the prior high at $2,252.0 to $2,252.1 before reversing lower.

How did you identify the Russell as the weak market?

Using the multi-timeframe Market Pulse labels on 15-minute charts and higher. The Russell and Dow both showed orange and bearish labels from daily through weekly. The S&P and NASDAQ showed more bullish longer-term trends. This made the Russell and Dow the preferred short candidates.

Can this stop hunt concept be automated?

Yes. The video shows trades from automated scripts that entered on a momentum cross with a retest entry. One approach for stop hunt entries is placing the order one or two ticks beyond the prior high on a trade you are already looking to short.

Did the stop hunt trade produce follow-through?

Limited follow-through in this case. Price did not break below the day's lows as expected. Buyers held near the lower range. The concept was valid, but the outcome was modest, which reinforces the importance of proper risk management on every trade.

How do I use Market Pulse to compare market strength?

Load the multi-timeframe Market Pulse labels on each index futures chart (S&P, Dow, NASDAQ, Russell). Compare the label colors across 15-minute, hourly, 2-hour, daily, and weekly timeframes. Markets with more bearish (orange/red) labels are weaker. Markets with more bullish labels are stronger. Trade short in the weak markets, long in the strong ones.