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- To figure out where stops will likely be raided, think of where the most money is, or where retail traders are likely positioned.
- Wherever the most money is, that is the direction price is not going.
- Once the sell stop orders are triggered and more traders are entered into breakout short trades, the new stops will be resting above the recent highs:
- If you are in a bearish environment, you will see extreme liquidation on the charts and it will look like lightning as pictured below:
- The banks and institutional traders want to take you out of the market.
- If you see the market start trading in range bound or consolidation phases (market profile like a range environment, you want to fade highs and fade lows. Raid the retail traders with the banks.
- Below is an example of price in a search and destroy profile in a bearish market environment:
