Stop hunting is a trading strategy that forces market participants out of their positions by pushing the price of an asset to the point where a stop-loss order is triggered.

A stop-loss order is an order to buy or sell an asset when it reaches a certain price, and it is often used by traders as a way to limit their potential losses on a trade.

In the context of decentralized finance (DeFi), stop hunting refers to a situation in which a trader or group of traders manipulates the market in order to trigger stop-loss orders placed by other DeFi traders. This can be done by intentionally buying or selling large amounts of an asset in order to move its price up or down, causing other traders’ stop-loss orders to be triggered and resulting in losses for those traders.

Stop hunting is considered to be a controversial and potentially unethical trading strategy, as it involves intentionally manipulating the market in order to cause losses for other traders. It is also considered to be risky, as it can lead to significant losses for the traders who engage in stop hunting if the market moves against them.

« Back to Glossary Index