Quote:
Originally Posted by Carnegie What this boils down to is really my question, is there any way of localizing where the orders MOST LIKELY will be ON A CHART? |
Carnegie, I like your question. Developing the ability to visualise stops in 'clusters' in a measurable and consistent way is a very useful goal.
One thing I look for is an accumulation of stops above retraces in a downtrend.
For example when price action is making lower lows and lower highs then it is safe to assume that traders who are in profit are motivated to protect their profits by moving stops down with each lower high.
When the distance between the 'lower highs' is more significant (say 150-200 pips) then the profitable short traders are
more motivated and
more likely to move their stops down to one of these significantly lower levels.
This leads me to the idea of
popular stop levels.
A popular stop level is protecting significant profits. Trailing stops placed above recent highs after a significant price drop -
or the opposite - trailing stops placed below recent lows following a significant price increase.
My chart below shows
how I visualise popular stop cluster levels. 