Hi, just want to check that I understand “Stop Hunting”?
My understanding is that there are people with buy orders set at a Fibonacci retracement level, in anticipation that there are smaller traders with stop loss orders set at the level, and that this will put the price back up.
Any help appreciated.
I always thought it was disgruntled news traders that said that. I know i`m going to get flack for saying that. But if theres any truth it someone here should bea ble to explain it.
Stop hunting can be thought of in two ways. First, there are traders who know where the actual stops are located because they can see the order flow. Second, there are traders who look at the charts or whatever and pick out spots where stops are likely to have accumulated.
Either way, it’s the same idea. Try to move the market to the stop price and get them triggered. This is not something easily done in a market like forex. It takes a lot of volume to move prices.
The complaint many folks seem to be making in regards to stop hunting has more to do with their brokers intentionally adjusting prices to trigger their stops. For example, I might have a sell stop at 120.15. If the market is at 120.20-25, my broker could alter the price to 120.15-20 and and thereby trigger my stop.
Obviously, that is a really dodgy move on a broker’s part. I have a hard time believing this happens with nearly the frequency some folks would suggest. After all, any broker seen to be doing it would likely lose business rapidly, if not run in to regulatory problems.
i personally dont know how prevelent stop hunting is. i do see cases on other forums that seem fishy. try doing a search on forex factory or money tech. there are maybe 1 or 2 cases up where people show some convincing evidence that their broker has been messing with them. as for regulatory problems. Forex is not heavily regulated as other markets. MM have the power to actually choose the price at which you trade by and they have the power to manually enter in prices at will. weither they exercise this power often, meh, i doubt it. but its something the traders should be watching out for. one way is to have a bunch of different data feeds going so you can compare prices and keep an eye out for fishy activity. another thing you should do is know how to play the stop hunting game. stop hunting is just a way to take out the amateurs and the little guys. is it fair? no but life is not fair period. in any market you trade in if you loose then someone else just won and took your money and when you win you just may have taken the food of the table of someone else. brokers arent perfect little angels and its a good idea to know how they make their money and how they fit into the game.
in the forextown section of the forum i started a thread called “can we really win” . i left a lot of links dealing with stop hunting and how to protect yourself against it.