Stop Hunting From An Order Flow Perspective

I'm so excited! I want to write about something I learned recently which is freaking golden in my opinion. Now you don't find this in textbooks but it makes complete sense and is definitely something that will be in my trading arsenal. I'm going to use two charts as an example.

GBPUSD Daily

CADCHF 4H

This idea is this: There are instances where we get a reversal setup like a pin at a double top/bottom. Countertrend traders get excited over this and jump in. To their horror price takes them out and goes on a little further before moving in their original intended direction. Why does this happen? Look at the charts above, the first arrow is where many people will enter. On GBPUSD they would have interpreted the first arrowed bar as a bullish pin with double bottom. On CADCHF they would have seen a false breakout pin bar. Sounds legit? What went wrong then? The answer lies beyond. Look at the rectangled areas at prior swing highs/lows which also coincides with a round number. Beyond these points are huge pockets of stops. We know this FOR SURE because they are very distinct major swing highs/lows and are round numbers. Now imagine you're a market maker. If you're bullish on GBPUSD and bearish on CADCHF, why on earth would you not target these stops since they're so near? They provide HUGE amount of liquidity for you to fill your orders! See the beauty of this?

So the conclusion is this: When we get a setup, zoom out a little, add the round numbers, and imagine yourself as a market maker. Would you be satisfied to move price where it is or target further obvious zones of stops? If the answer is the latter, DO NOT take the setup. In fact, very often the initial setup is sub optimal to begin with. This sub optimal setup will in turn suck in less experienced traders and provide even more liquidity for the market makers when they get stopped out too. In the case of GBPUSD, we have a weak pin which did not hunt any stops and lacks confluence. Somebody who just learned about pins would have jumped in here and get trapped. I know because I've been there so many times.

Seriously the above knowledge is super golden, I'm so glad I chanced upon it and I know it'll protect me from many failed setups as well as help me take many other A+ setups.