SL Hunting 5 and 9 EMA Strategy

Stop Loss (SL) hunting is a strategy used by some traders to exploit the stop-loss orders of other market participants. This strategy involves deliberately triggering stop-loss orders to enter positions at a more favorable price. While it can be controversial and is often seen as predatory, understanding how it works can help you protect your trades and potentially use it to your advantage.

What is SL Hunting?

SL hunting involves placing orders just above or below key support or resistance levels where many traders have set their stop-loss orders. When the price reaches these levels, it triggers the stop-loss orders, causing the price to move rapidly in the desired direction. This allows the SL hunter to enter a position at a better price and potentially profit from the subsequent price movement.

How Does SL Hunting Work?

  1. Identify Key Levels: Look for key support and resistance levels where many traders are likely to have placed their stop-loss orders.

  2. Place Orders: Place buy or sell orders just above or below these key levels to trigger the stop-loss orders.

  3. Exploit the Movement: Once the stop-loss orders are triggered, the price moves rapidly in the desired direction, allowing the SL hunter to enter a position at a more favorable price.

How to Protect Yourself from SL Hunting

  1. Avoid Obvious Levels: Instead of placing your stop-loss orders at common psychological levels (e.g., round numbers), consider setting them at less obvious points.

  2. Use a 5-Minute Chart: When you suspect a stop-loss hunt, check the 5-minute chart to identify any unusual price movements.

  3. Stay Informed: Always stay informed about market conditions and be patient. Avoid rushing into trades and wait for clear signals.

  4. Set Wide Stop-Losses: Set wider stop-losses to give yourself more room and reduce the likelihood of being taken out by SL hunters.

How to Use SL Hunting to Your Advantage

  1. Identify Common Stop-Loss Levels: Look for levels where many traders are likely to place their stop-loss orders.

  2. Place Orders at These Levels: Place buy or sell orders just above or below these levels to trigger the stop-loss orders.

  3. Monitor the Market: Keep an eye on the market and be ready to adjust your strategy if necessary.

Strategy:

We will use 5 and 9 ema for entry after trap.

Buy Setup:

Wait for a support break. Support can be a trendline or any pattern.

Once price breaks support, sellers will enter. Now we will wait for price to come above support again.

In this case, ema 5 will cross above ema 9. Now wait for price to take support at 5 or 9 ema and enter in long position keeping stop loss below candle or 9 ema as shown in image.

SELL SETUP: 

Exactly opposite to BUY SETUP.