Stop-loss hunting is when price briefly breaks a key level to trigger traders' stops, then reverses. The market uses your stop orders as liquidity to fuel the real move in the opposite direction. If you're getting stopped out repeatedly on early exits, you're being induced.
If you keep getting stopped out right after you enter, you're being induced and you don't even know it. Here's what that means. When the market breaks past the key level, a high or a low, most traders see that as a signal. They think the market is going in that direction, so they enter. But that breakout wasn't the move, it was the bait. The market broke past that level on purpose to pull traders in on the wrong side, because once they're in, their stop losses are placed on the other side, and the market needs those stops to fuel the real move. So the breakout gets everyone excited, they enter, and then price reverses, takes out all their stops, and moves in the opposite direction. That's an inducement. The market induces traders to enter, use their positions as fuel, and went the other way.
