What is a stop hunt (liquidity sweep) and how to trade it

Many traders put stops just above a recent high or just below a recent low. Large players need that liquidity to fill big orders, so price often spikes through the level, triggers the stops, and reverses. This is called a stop hunt or liquidity sweep.

You can recognise one by a long wick through an obvious level, with the candle closing back inside the old range. The wick shows the move was rejected.

How to use it: do not place your stop exactly at the obvious level, and consider waiting for the sweep and the reversal. One setup our research tests is the 4-hour candle that sweeps a prior high or low and then breaks structure on a lower timeframe.

A sweep is only a signal when it fits the trend and a zone. By itself it is just a wick. Learn more in the Academy lesson Breaks of structure.

Education only. This is not financial advice. Trading gold with leverage involves a high risk of losing money.

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