How to Avoid Stop Loss Traps, Sweeps & Manipulations. Smart Money Concepts

Never Get Stopped Out Again!

In my trading career, I was losing thousands of dollars because of stop loss traps until I discovered how Smart Money really operates.

In this article, I will weaponize you to beat the stop hunters.

I prepared for you 4 efficient strategies to place a safe stop loss and avoid the traps, sweeps and manipulations of Smart Money.

1. Trade from liquidity zones

Smart Money feeds on liquidity — that’s why they hunt your stops. Every trap, every fakeout, is designed to grab YOUR money before the real move begins.

The liquidity accumulates and distributes within liquidity zones.

High saturation of liquidity always lowers the chance of the occurrence of market manipulations. When big money flows, the need to hunt stops disappears.

That's why, strictly search for trading opportunities within these zones and trade only from these zones. 

Examine USDCAD price chart.

I have underlined significant liquidity supply and demand zones.

At the moment, the price is staying beyond these areas.

I recommend strictly waiting for the test of these areas first

before placing any trade.

2. Wait for a trap first

Of course, the manipulations also take place within liquidity zones.

For that reason, instead of placing the trade and hoping that smart money will not hunt your stop loss, let them make their move first.

Wait for a trap and only then open the trade.

Look at that important supply zone on USDJPY on a 4h time frame.

Instead of selling immediately after its test, it's better to wait for a bullish trap first. Once the price returns within, that is your signal, it shows that smart money exhausted their manipulation. That's where we strike!

With that approach, you are not avoiding manipulation anymore - you're using it as your trigger.

3. Trap based stop loss

Placing the trade, make sure that you set it beyond the highs/lows of the trap.

If you sell from a supply zone, your stop loss should lie above the highs of a bullish trap.

And don't be greedy, remember that there should be a sufficient distance between them.

Check a recommended stop placement on USDCHF.

After a test of a supply zone and a consequent liquidity grab, sell position is opened. Stop loss lies above the high of the trap.

Buying from a demand zone, set your stop below the lows of a bearish trap.

Buying the market after a test and a bearish trap within a demand zone, place stop order below the lows strictly. And give sufficient space in between.

4. Use multiple time frame analysis

Single time frame analysis is very risky and quite often is not sufficient for safe stop loss placement.

Once you identified a liquidity zone on one time frame, check a higher time frame as well.

Quite regularly, higher time frame analysis will reveal hidden parts of supply & demand areas.

On the left chart, we have a strong 4H demand zone on EURJPY forex pair on a 4H time frame.

Analysing a daily time frame, we can see it is just a part of a huge historic demand zone.

Such a perspective and deeper analysis will help you to make more accurate trading decision.

Remember This

The best strategy to use these techniques is to learn to apply them all together.

That will give you a strong weapon against traps and manipulations and will help you to avoid most of the stop hunts.

Integrate these tips in your trading plan and good luck to you in trading smart money concept.