Are there any papers about possible trading strategies you can apply when you know where a large cluster of orders is located in the order-book?
These seem to fall in the liquidity-provisioning/hunting range of strategies, is this correct?
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To search for "stop-hunting" I would search for stop orders and doing so on ssrn turned up the following:
But if you're looking for something that addresses what's in the body of the question then I'd search for something entirely different. When one knows there is a large cluster of orders in the order book, it means you're looking at limit orders and not stop orders as stop orders are never publicly disclosed. In that case you'd want to search for papers that deal with the order book, a quick search on ssrn turned up:
Usually a strategy that is looking at the order book will have a short time horizon and probably be close to if not hft in which case yes, they have something to do with liquidity provision as normally you're trying to offset imbalances. This paper using a unique data set shows that hft has mean reversion/imbalance offsetting strategies:
The academic term for this phenomenon is "predatory trading." Brunnermeier and Pederson (2005) wrote an entire paper on the topic, and you can also examine the references contained therein.
This paper studies predatory trading, trading that induces and/or exploits the need of other investors to reduce their positions.We show that if one trader needs to sell, others also sell and subsequently buy back the asset. This leads to price overshooting and a reduced liquidation value for the distressed trader. Hence, the market is illiquid when liquidity is most needed. Further, a trader profits from triggering another trader’s crisis, and the crisis can spill over across traders and across markets.
The paper is mostly theoretical, covering the consequences of predatory trading rather than how to do it (which seems to be what you're interested in). Judging from the examples in their introduction, I would say that typically one first has knowledge regarding the presence of others' stop-loss orders then they place predatory orders in response, rather than dedicated "stop-hunting".