Transcription
Hey Bank, don't hunt for your stop loss. Don't worry, Bank doesn't give an utter [ __ ] about your 0.46 stop loss on GBPUSD. Maybe your CFD prop firm or your CFD broker will care because that's who you are actually trading against.
But when you delve deep into real market mechanics, not some cheap YouTube conspiracy theory, and you start looking at actual order flow data, like with Footprints or heat maps, you quickly start realizing that some of the things, if not most things, you've been taught in the trading space, especially this thing about banks hunting for retail stop loss, is complete and utter [ __ ].
In a previous video, I provided not an opinion, okay, a data-backed explanation and debunking on the concept of stop hunting. So be sure of checking that out. Today, we will go even deeper into this concept, and every single time a high is being swept or a low is being swept, we will see what's happening behind the scenes or behind the candles so that we can have a clear understanding on what's actually going on.
So we're starting from the 19th of March on the ES contract by seeing that all of these highs were swept by this movement. So if we go deep into that movement and see what's happening behind the candles, this is what a usual stop run would look like. Let's just make the number a little bigger. And as you can see, when stops hit, they ask, they raise up price, and market makers are absorbing all of that buy inertia by being passive sellers. And you can realize that there was a sprint in this candle because there's zero contract and zero contracts all over here. But this happened at 4 a.m., so we're still in the Asian session, but still, some of those stops were triggered.
Let's see what happens when we sweep some lows during the London session. Instead, we see that down here, yes, maybe some aggressive selling has happened, but not that much. There's not a lot of imbalances, not a lot of delta. Then once we go below those lows, once again, there's a little bit of a selling activity, but very few. So this is not a stop run per se. There was not a lot of stops being triggered here. This is what we called a failed auction. So sellers trying to break below but not having enough strength to push it lower and lower. Instead, new aggressive buyers start skiing in. So yes, a low has been swept, but this is not a stop run, and for sure, they didn't hunt for retail stop loss as we discussed.
Let's see what happens once we go above that level. New buy orders start kicking in, and as you can see, volume starts rising. But even if there is some sort of stop run right above here, which by the way, is exactly above this high, firstly, we see a lot of aggressive selling at that level. But only once we sweep above this other high, then we see an actual stop run. This is more likely to be a stop run. And as you can see, we don't go down right away. And invert for the rest of the session, we just simply reabsorb this quick imbalance created by the stop run and then we keep moving higher. As we keep moving higher, we have more breakout buyers, so aggressive orders. Eventually, there was someone there who was trying to absorb that pressure but couldn't make it, so we push higher even more. Once we break above here, the delta is 14. So this is not a stop run because there's a lot of aggressive selling activity in this area. If it was just stops, we would have seen a very green candle above here in all this part, and hence a much higher delta. So this is not a stop run.
So when we went above all of the daily highs, because this was also previous day high, probably there was not a lot of stops being triggered here. This is more buyers trying to push higher, but sellers clearly showing that they are in control with an imbalance on top and the new initiative candle with new imbalances that eventually brings price back down. So now, after this high has been swept, these lows over here should be the next target. We got also these lows over here. Let's see what happens in those candles here. There seems to be a little push down here, but not a lot of contracts exchanged in the lower part, and just with a little aggression, buyers get back in control.
Now let's see what happens below this candle. We see some stops being triggered. We bounce back up, and then after this low, more aggressive selling starts kicking in. So this is not a search for liquidity. This is actual selling pressure pushing price and the auction overall lower and lower and lower and lower and lower and lower and even lower. Still, we don't have a lot of data on what happens here on what was before here if there was an important low. So let's move on a little bit and take a look at what happened below these lows and below these lows and above these highs and these highs. We can see that below these lows, nothing interesting really happened, and no stop was triggered below the daily lows. So this is overall a failed auction. There was less and less interest in selling here. No stop loss was triggered. There was not at all any liquidity grab below here, whatever that means.
Let's see what happened up here instead. Once we swept the first high here, we have seen some increasing buying activity, which could be a stop run. We would need MB data to qualify it, but anyways, we have some response as you can see, like we have all of these green candles that suggest us that passive sellers were absorbing all of this very little buying activity, and then with just a little aggressive selling, price went completely on the other side. But let's see what happens above the current session high. And as we can see, not a lot of activity here either. I would also define it as a failed auction. Not a lot of stops being triggered.
Now, now let's see what happens here. Probably by the way, at this point, at this time of the day, in this day, there could have been some sort of FOMC data or meeting. So let's see what happens below the low that they plotted during that news event. As we can see, there is some volume here, but not surprisingly high volume. Volume is high all over the previous candles. Actually, here were not even that high. 12K con, we have 9K contracts, 12K contracts, and an exhaustion in sellers. There was not a lot of stops being triggered below here.
Let's see once we break above this high, what happens. Not a lot of activity here. Once we break above that though, then we really start seeing some buying aggression coming in. This candle is 10K contracts, way higher than all the previous candles. In fact, when we test all this area of huge aggressive buying, we keep trading higher and higher and higher. Now we traded all the way higher. Let's see what happened at the top, right above all of these highs. And look at how many highs there are here. There is this high, this high, this high, this high, these highs. Let's see what happens here. There must be a lot of volume, right? 2,000 contracts. Breadcrumbs, okay, very, very few contracts. A couple of stops being executed here, but nothing worth hunting. And even if you would expect a lot, a lot, a lot of sell stop above here, there's very, very little volume exchanged here. So this is definitely not a liquidity grab because if it was a real liquidity grab, you would have seen way more volume.
But even if there's not a lot of volume here, as we have seen, still the move down is so impressive. So if the theory of, huh, they went up here because they wanted more liquidity to fuel the next move, doesn't make any [ __ ] sense. The real liquidity was exchanged here, not above this high, not below these lows, but here because in all of this area, a lot of volume has been exchanged. This is where the fight actually happened. Above here, as we can see from the volume profile, there's little to no volume traded. So thinking that this move happened because they needed more liquidity, guys, most of the liquidity was exchanged here. Don't worry, they're not hunting for your stop losses.
Now, at some points right here, we went below all these lows and all these lows. So there must be a lot of volume right here, and we are at the end of the session. So I guess that in this candle, there's probably a lot of volume, like a lot. And as you can see, 53,000 contracts are executed on this candle. As you can see, it's very balanced actually, like not a significant amount of selling activity here was higher than the selling activity over here. And as you may not know, the last candle of the session is when all the day trading algorithm exit the market, where a lot of hedge funds or long-term funds like ETFs are buying the underlying asset because they're required to do it by law. So market makers or passive liquidity becomes extremely active. There is a huge feast for market makers. This is the best time to be a market maker because you can earn a lot of money from just bid-ask spread. So this is not a stop run. This is a huge absorption of contracts in every part. And as we can see, this huge liquidity grab doesn't fuel a move higher because we keep getting lower and lower and lower.
So what are we really talking about here? Because yes, this pattern has an edge, but calling it stop hunting or liquidity grabbing, if you look at actual volume, most of the times it doesn't make sense. And it is more likely that a real stop run, not stop hunting, stop run. Why is it called stop run? Why was this move in the order flow space, not the ICT space? The order flow space was usually called a book sweeping or a stop run, and not hunt. There's no one hunting for stop losses. We call it a stop run, run, because when we go below these lows and below these lows in all of this area, there might be some level of stop orders. There's going to be stop orders resting below, and stop orders are very specific. They are sell orders hitting the bid. So all of the orders here in the purple part are aggressive selling orders. So if this magnitude of aggressive selling happens below a low, we can deduce it's an actual stop run. And it's called a run because the moves happen really fast. And this happens because when there are stops, they're triggered market, so they are going to be executed at the best price where there is some buying liquidity available in the order book. As we discussed in the previous video, you should check them out by the way. So in every one of these levels, there were buying contracts, buying contracts, buying contracts, and the sell stops that were here consumed and swept all the buying liquidity. So stop orders swept away book liquidity. It was not stops being swept, it was stop orders sweeping the book. That's why it is called book sweeping. So all this part of the book becomes basically empty. And as you can see in this part of the candle, the right side of the candle, there's little to no trading activity. In fact, the delta is way above 50% and there is a lot of volume. This is an actual stop run. All of the rest we have seen in the previous example, really few of them were actual stop runs or actual liquidity grabs.
But again, even here, you would think that this move below here fueled the entire move up. But what fueled this move up wasn't this few volume that was exchanged in the stop run. Do you really think that 1,000 contracts is enough to fuel the next move? Or or the remaining hundreds and hundreds of thousands of contracts that were executed in this area actually fueled the next move? And by the way, it isn't the counterparty which is fueling the move. You're simply getting a better feel. But most of the contracts in this area were executed here. This is the real area of interest, not this one. So when we break above this level, then the there is a higher chance that we will get higher.
And take a look at what happened above here. And as we can see, there was there's very little volume above here. But still, this little liquidity grab with a couple hundred contracts have fueled all this billions and billions of dollars worth of contracts. This was simply little stop run with a little failed auction. Some very little buying activity. We start trending a little bit higher, a little bit higher. Order flow start being bullish, and then this move happened. And this move is very interesting because we're breaking below these lows over here, these lows over here, these lows over here. So a lot of selling seems to be happening below here. And as we go right below the low that we plotted, you start seeing imbalances and actual liquidations. But still, there's a lot of buying on this candle. This is 10% delta. This is not a lot. And right before going below the low where an actual selling started happening here, we have thousands and thousands of contracts being both bought and sold. Then below these couple of lows, a lot of selling pressure starts kicking in. And once we go actually below the low, there's not a lot of selling activity. Then finally, we reach the final stage of the session where, as I told you, most of the volume is being traded. And most of the volume is trading on this up candle, not on this low candle. But still, in this part alone, if we compare it to the rest of the session, so this could have actually been liquidity grab or inducement. Or like in this case, when we go below all of these lows at the beginning of the session, there's a lot of selling pressure, selling pressure, and we start getting below here, and there is a lot of volume going on down here. All of the session is right here. So this is an actual accumulation phase where a lot of buying and selling was being absorbed over here because the more time price spends below a low or below more lows, the more liquidity they are grabbing. All of the session is consolidating below those lows. Then it's an actual liquidity grab. So the liquidity grab is not this, but more something like this. This was the liquidity grab. So a whole phase of distribution or accumulation, as Wov called it, which is by the way, the basics of all ICT concepts or all order flow concepts, volume analysis concepts. It all comes from Wov. So it's not about an algorithm. It's not something new. This new trendy ICT thing is nothing new. No one invented anything new. It's been around for a 100 years.
All right, now let's take an example right here. After the latest FOMC data, we had a bunch of lows below here. Let's see how many contracts were executed there. Yeah, not a lot of contracts. So do you really think that from up here, they moved hundreds of hundreds of thousands of contracts and billions of billions of dollars just to take a couple of stops here? As you can see, order flow data shows us a different story. We will keep going deeper into these concepts in the next videos, so subscribe to the channel now. See you in the next one. Ciao.