How Order Flow Logic Should Improve My Trading

We all know those dreaded situations. We enter a trade with our best judgement, following the trend etc. etc., we place our stoploss with great care and consideration. And still Mr. Market seemingly knows what we do and think. With uncanny precision price will come to our stop loss, trigger the order and subsequently turn around to fly in the anticipated direction of the trade we had.

So recently I have found the Youtube videos of some people, one of them being Mark Chapman. He does a good job explaining why these “stop hunts” happen and how big institutions need to find pockets of liquidity to fill their massive orders. So what I have been playing with is actually playing those supposed stop clusters as entry signals.

As with any technical strategy you can find lots and lots of examples where this would have worked. Look at this recent uptrend in EURUSD on the 4h chart:

Numerous times we could have prepared for those stop hunt dips and profited by buying with the market makers.

So let’s see how this plays out in real-time trading. In my initial back-test it actually worked out ok on some charts. But also it got me stuck in some positions when the trend turns. I think I can possibly work that out with small position sizing.

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