Traders place stop-loss orders below recent lows. When price drops and triggers many of them at once, those orders flood the market as sellers, pushing price down fast. This creates a buying opportunity after the panic subsides, since the sell side is temporarily thin.
Traders will buy and typically place their stop loss below a recent low in the form of a sell stop order. As price approaches that level, all of these sell orders will enter the market. But where do they end up? Well, behind the scenes of every market, there is an order book with buy limit orders resting below price and sell limit orders resting above price, all waiting to get filled. We call these market makers. The stop losses instead will enter as market orders one by one and act as market takers. They'll take whatever buyer they can find. As these will be matched, that will become the new price. The other stops will have to be matched a little lower, some even lower, and some even lower. So price will drop very fast. And careful, because this is your chance to profit from this. This dynamics typically happen in a very fast pace, like this, pshew! And stop orders will sweep away every buyer in the order book, and it will take a while for sellers to repopulate the book with new orders. So price will have an easier time going through these levels, because that is the path of least resistance. So you can buy as soon as the stop run is over and take profit here with a decent win rate. And with our DeepDumb software, you can see all of this happening in real time and get an alert whenever a stop run happens. Comment stop loss and get your personal invitation to the DeepDumb launch in your DMs. And even if a lot of people don't know this,
