Understanding Market Liquidity and Stop-Loss Triggers

In the world of centralized exchanges, limit orders, including stop-loss and take-profit orders, form part of the "order book." While not visible to everyone, market makers and the exchange are aware of where clustering of liquidity occurs. Their role involves managing these flows to ensure order fulfillment. Market makers do not target individual traders personally. They operate on algorithms indifferent to specific traders' identities. However, since most traders place stop-loss orders at typical levels—near previous highs or lows—these zones inevitably become targets due to the liquidity concentration there. The exchange does not oppose your stop-loss orders. Its interests lie in volatility and volume, both generating transaction fees and revenue. Therefore, a conflict of interest exists, but not necessarily an attack on individual traders. What should you do? - Move your stop-loss to break even. - Focus on risk management rather than emotional reactions. - Analyze why your order was triggered instead of feeling offended. The market isn’t hunting you; it’s performing its functions. The question is whether you're willing to understand how it operates.