Every trading course teaches you to place your stop loss just below support or just above resistance. It is standard advice. It is also why you keep getting stopped out before the market reverses in your favor.
Think about where you put your stops. Below the obvious support level. Below the round number. Below the swing low. Now think about where every other retail trader puts their stops. The exact same places.
This creates something called a liquidity pool — a cluster of pending sell orders (stop losses) sitting at a predictable price level. Thousands of stops, all in the same zone, all waiting to be triggered.
Now think about who needs those orders. A large institutional player — a bank, a hedge fund — who needs to buy two billion euros cannot just hit the buy button. There are not enough sellers at the current price. They need a pool of sellers. And where is the biggest pool of sellers? Right below that obvious support level, where all the retail stop losses are waiting.
So the market pushes down, breaks through support, triggers all those stops. Those stops are sell orders — they create a burst of selling that provides the liquidity the institutional buyer needs. The bank fills their buy order at a great price. Then the market reverses sharply upward, because the large buyer has entered the market.
The retail traders who got stopped out watch the market go exactly where they expected — after taking their money first.
This is not manipulation. It is the natural mechanics of a market where large players need liquidity and small players cluster their orders in predictable locations. The market goes where the orders are — and retail stops are always in the same places.
The solution is not to stop using stop losses. The solution is to stop putting them where everyone else puts them. Add a buffer. Use wider stops with smaller position size. Better yet, learn to identify where the liquidity pools are and trade alongside the institutions rather than against them.
This concept — the liquidity cycle of accumulation, manipulation, and distribution — is covered in detail in Module 6 of The Hidden Architecture of Forex. It is the single most valuable framework I have ever learned about markets.