[Serialized Article] The reason the market reverses right after hitting stop-loss

How much is it?

“I took courage and cut my losses, and right after I hit SL it moved up…”
This is a market cliché that everyone experiences many times, right?
This phenomenon reverses as if someone is seeing through your actions.
A phenomenon that seems to mock you

In fact, it’s not a coincidence but a “necessity.”

In this article, we will explain why the market reverses immediately after a loss cut,
and share a way of thinking to avoid being driven by that noise.

【1: Why does the market feel like it’s “ targeting you”】

Large traders and market makers know where many people place their “loss-cut orders.”
They also know how much liquidity is withdrawn when those losses occur.

Many people place loss-cut orders slightly below the recent low, or near the lower end of a range
around the lower end of the range.
Therefore,a large concentration of stop orders (stop-loss orders) gathers in that price range.

Market makers and large traders move with the aim of those stops.
They cut the stops once and then reverse.
This is the so-calledstop hunting.

The reason your loss cut feels “targeted” is that a deliberate move is actually taking place.
So why don’t everyone happily profit together, and instead hunt?

That’s because the weight of realizing profits when prices rise is something many have heard about.

And another, even more important factor: “adding to the position.”

The large players buy after a large amount is dumped by stop-out losses and build positions.

【2: Develop the eye to distinguish noise from trend】

The essence of the market is the coexistence of “noise (short-term fluctuations)” and “trend (the main direction).”
If you react to short-term noise and cut,
by the time the main trend becomes visible, you may have already lost your position.

Especially with highly volatile assets like gold (XAU/USD) and Bitcoin,
it’s not rare that
a $10 bit of noise hides a $100 trend.

If you cut too quickly,
you end up being “swallowed by the small waves and missing the big ones.”

【3: Decide loss cuts by structure, not price】

When I was teaching at a school, a frequent question was “Do you cut losses after it falls X pips?”
In essence, that is where the fundamental mistake begins.

Loss cuts should be decided by technical structure, not by numbers.
In other words, the point where “there are no buyers below that level” —
is when the market structure has broken, and that’s the true loss-cut point.

For example, in an uptrend,

• when the price breaks the previous low
  the moment this structural break is confirmed,
  is the timing to cut losses.

  → I think this is the common understanding of loss cuts.

  When price breaks the previous low with volume and drops quickly,

  the low at the moment this price action is confirmed is

  the true timing to cut losses.

  In fact, you could enter right here.

【4: Three perspectives to prevent rising after loss cuts】

To improve the precision of loss cuts,
having the following three perspectives is effective.

1. “Loss-cut line = where the crowd places it” to avoid
   → To avoid stop hunting,
   merely shifting a few pips down (or up) makes a big difference.

   Furthermore, you should place the entry below the hunting location in the first place.

2. Consider noise tolerance in terms of time frame
   → On M5 it may look like a reversal, but on H1 it is often a pullback.
   Moreover, on H1 there is still room to move further down.

   Redefine your loss-cut width according to the time frame you trade in.

   Entry should be considered on a higher time frame than the volatility of the exit.

3. Decide with structure, not emotion
   → Not “cut because you’re scared,” but “cut because the trend is broken.”
   Drawing this line changes the quality of loss cuts.

   In other words, if the price keeps breaking lower after a liquidation, cut.

【5: Summary — Loss cuts are not to be avoided but a strategy】

Loss cutting is not a loss itself.
It is the entry fee for riding the next wave. If you can build a risk-reward strategy in the first place,

loss cuts are natural, and if you act with the above considerations, your results will improve.

What goes up after a loss cut is not because you were wrong,
but because
the market structure is designed that way.

What matters is your ability to stick to your rule of not entering in noise.

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