Stop loss hunters?

I’ve been running into the issue lately where say i place a stop a few pips under support, maybe even one that aligns with a fib line.

I figure it would be a safe place to put a stop and lo and behold one of those 1m candles seem to come from out of nowhere push down below support just far enough to take out the stop and then the candle body will close right on the support line and then the next candle always take off to the upside.

is it just bad luck or are there brokers/funds/big money out there who can and do push the price just enough to take out the stops?

it gets really frustrating to try and take swing trades on the 15m or 30m chart, get in somewhere in the middle. put my stop under support, have the price bounce around but not enough to TP, watch it drop to support for a loss and then dip just far enough to take out my position :20:

They’ll have a go at running stops sure - it’s a quick extra hit for them by taking out some of the weaker hands first before making their move. Give yourself a little more breathing room perhaps if you find yourself constantly getting just clipped in obvious areas of support.

Stop-hunting absolutely occurs, every day, almost constantly, in every pair.

Stop-hunting may be the most consistent and predictable thing in forex.

Some of it might come from your broker, if you have a dealing-desk broker. But, the vast majority of stop-hunts are launched by the biggest players in the market — the big banks, and the biggest speculative interests.

If you could make your stops totally invisible, they would still get picked off — if you continue to place them at common, obvious price points. That’s because the big players, who have the clout to push prices, go gunning for [B]clusters of stops.[/B] If you “hide” your stop in one of those clusters, you’re going to get picked off along with all the other stops in that cluster.

You can learn to recognize where the “dumb money” is most likely placing their stops, and then place [B]yours[/B] somewhere else. That’s a defensive strategy. Or you can play along with the stop-hunters; you can be one of the hunters, not one of the hunted. That’s an aggressive strategy.

Here’s an article written a few years ago by Boris Schlossberg, when he was Chief Currency Strategist for FXCM:

Stop Hunting With The Big Forex Players

Here’s a portion of one key paragraph from the Schlossberg article which addresses your question directly:

“Although it may have negative connotations to some readers, stop hunting is a legitimate form of trading. It is nothing more than the art of flushing the losing players out of the market. In forex-speak they are known as weak longs or weak shorts. Much like a strong poker player may take out less capable opponents by raising stakes and “buying the pot”, large speculative players (like investment banks, hedge funds and money center banks) like to gun stops in the hope of generating further directional momentum. [B]In fact, the practice is so common in FX that any trader unaware of these price dynamics will probably suffer unnecessary losses.[/B]”

I bolded that last sentence for emphasis.

I’ll add to Clint’s comments that stop-hunting happens in EVERY market.

Yeh I figured thats what it was but you know it’s one of those things where “how much is enough?” I’m starting to think i’m better off putting in a catastrophic stop and then hedging myself with counter pairs.

learning these little tricks can be painful even though i’m only trading a micro account

Knowing that stop-hunting exists, you can use that information to identify possible profit targets. I call these areas “magnetic points” because price action will seem to magnetize right to them, often to the exact value. Therefore, if you are entering a new trade and there is a magnetic point in your profit zone, you can feel relative confidence that price will be drawn to it.

Just keep in mind that there really isn’t any such thing as hedging in that fashion. What you’re really doing when you try that is changing your risk to another pair. For example, if you’re long EUR/USD and you want to protect that by going short EUR/CHF you now have a short USD/CHF trade (EURs cancel out leaving a short USD and long CHF).

I’m doing something similar short USD/CAD, long EUR/USD in unequal lot sizes, just curious to see how it works out. I was going to use USD/CHF instead of USD/CAD but the USD/CHF pair is right on top of heavy support as far as I can tell shorting it may be rough since it’s touched it 3x prior over the past few months

Ever think maybe your stops are where you ENTRIES should be?

:wink:

ahhh, good point, too bad i’m not quite that good at chart analysis just yet. But yeah, makes sense

This. (10 characters)

Not sure what you’re trying to accomplish there. If you add a long EUR/USD to a short USD/CAD you end up double short the USD (roughly), with long exposures in both EUR and CAD. No hedge. If you were short USD/CHF instead of USD/CAD and added the EUR/USD long you’d still have a double USD short with EUR and CHF longs, which would be a lot like having a double EUR/USD long position.

yeh i dont know wtf i was thinking when i was messing with that, probably just because of the base currency being reversed lol.

LOL! I’ve been known to do things like that as well. :slight_smile: