True, but the important part of my post in this regards was “Re-entry evaluation/ strategy in case you get stopped out”. e.g. wait until the market turns, wait a certain amount of time, drop the trade at all etc
I also think (and that’s just my opinion without having any research on that) no market player or group of players can currently influence the price of the majors for hours or days. I also read that book saying Bill Lipschutz was trading 3bn positions at Salomon at was in the late 80ies. However, with electronic processing and huge volume markets IMHO are very efficient these days.
However, I will have a look at that silver example. Thanks for the tip
Does anyone have any hard evidence of this taking place? I still think it’s a myth.
By evidence I don’t mean “the price spiked up for no reason.” I mean actual evidence the “big boys” place trades for the sole purpose of taking out stops.
Any kind of evidence that is real evidence, and not just circumstantial. I’ve never seen anything remotely resembling actual evidence to show stop hunting exists.
All I’ve even seen are unexpected price movements on a chart and people saying “that’s stop hunting.” How do you know a price movement is a bank/government manipulated prices with the intention of triggering other traders stops?
There are easier and less risky ways of trading the markets. I can’t fathom why someone would want to do this.
It takes a tremendous amount of money to manipulate the markets (I’m thinking tens of billions or more). What if the bank is wrong and there aren’t a lot of stops and price does not turn around?
One thing that comes to mind that I haven’t seen mentioned yet are the terms “bull trap” and “bear trap”. Could that not be considered market movers stop hunting?
Most often when you here “stop loss hunting” one tends to think of thier broker screwing you out of your position.
I tend to believe that in reality its a trader who makes a bad trade and is wanting to pin the blame on someone other than themselves. In this regard, I’ve always though of Stop loss hunting as a myth
As far as institutional traders go, its my thought that you have to seperate these into two groups… banks/ hedge funds in one (Group 1)… goverments/institutional traders in another (Group 2)
Obviously Group 1 is out to make money, and in that regard could see them manipulating the market as mentioned in the way of stop loss hunting trading style.
Group 2 make/lose money as a side affect of thier real purpose.
Though one has to remember that us retail traders make up like 1% of the market, so it is somewhat hard to fathom an institutional trader taking out our positions on purpose
Isn�t asking if there is hard evidence regarding stop hunting a bit like asking for hard evidence that Santa Clause is a myth? Both might be circumstantial at best.
I don�t know about Santa Clause but I do believe that forex market makers stop hunt.
NYSE specialist and NASDAQ market maker do it, that�s part of their job. Why wouldn�t forex market makers do the same? It shakes out the weak positions, isn’t it part of the trading business?
Webster�s
Circumstantial evidence: evidence that tends to prove a fact by proving other events or circumstances which afford a basis for a reasonable inference of the occurrence of the fact at issue
Boris Schlossberg might not know �everything� about forex, no one does, but I�ve read some of his stuff and he seems to have a mainstream and reasonable voice. Here�s a quick quote from an Investopedia article by Boris:
[I]�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. In fact, the practice is so common in FX that any trader unaware of these price dynamics will probably suffer unnecessary losses.�[/I]
Here’s something I found to give food for thought…found it in an online excerpt of the book “the 10 essentials of trading”…
If you spot consolidation and you straddle the market without checking for fundamental announcements, you’ll likely get caught in a trap.
After consolidation has formed and there is no fundamental announcements, bull traps are false breakouts to the south of that consolidation doing nothing more than fulfilling the natural numerical sequence of the market, then U-turning back in the direction of the previous trend, moving towards the fibonacci D extension level. In other words the market begins to consolidate inside the natural A, B, C, D formation of a price swing.
I doubt anyone does, and if someone did they wouldn’t come forth with it because they are the guilty party.
For me it’s just best to assume it happens and prepare for the worst. “just because you are paranoid doesn’t mean there isn’t someone out to get you…lol.”
I have found proof of retail traders: losing their butt, just gettting by, making a living, and some that are even wildly popular. I have to assume they do everything to put the odds in their favor.
It�s been a long time since I�ve read about this but if I remember correctly the NYSE specialist and NASDAQ market maker are the buyers/sellers of last resort. In other words, even when the market is crashing and there are no interested buyers, the specialist & market makers are buyers of last resort and must themselves buy all orders coming into the exchange. Ouch! right?
But…there�s always a but, the specialist & market makers are allowed and expected to stop hunt, bull & bear trap, gap open, hold orders, trade against the order book, etc and make a profit over and above the point spread. Yes profit from inside information…And all legally!!!
So on one hand the stock specialist & market makers can make huge profits with their inside trading advantage and on the other hand the specialist & market makers can get killed when the market drops. Almost like an insurance company, able to make huge profits in good times but get hit real hard when the hurricanes come.
So, because forex is not an open centralized exchange we really don�t have any hard evidence on what�s going on with stop hunting, bull & bear traps etc. But using the stock market model can we see that if forex market makers did stop hunt, trade against the order book etc that it�s not evil or dishonest, but just another side of the trading business. And without the forex market makers there wouldn�t be much in the way of retail forex trading.
I love you, my friend, but I think you have a blind-spot where “stop-hunting” is concerned.
You’re asking for proof that it happens. My dad used to say that no one can prove anything. Hell, I can’t even prove that the world is real — this whole thing may be just a virtual world. But, I digress.
Regarding “stop-hunting”, I would say that if it looks like a duck, and it quacks like a duck, then …
The October 2009 copy of SFO, �stocks, futures and options magazine� arrived in my mailbox Saturday. This morning I flipped the magazine open and was surprised to find an article �Hunting for Stops in the FX Market� by Boris Schlossberg, how timely! Actually the article doesn�t get into whether stop-hunting occurs or not, it’s more about set-ups to trade along with the stop-hunters. Seems like a worth while read, you can read it online at: sfomag.com.
Clint, If I remember correctly many months ago didn�t you mentioned using this method? Wonder if it could be adapted and used on the GBP overnight trade, instead of waiting and trading the break-out, use this method and trade with the PA before the break-out into the high or low lines? just a thought?
When I see that chart I don’t see stop hunting, I see a lot of stops getting hit. The two aren’t the same thing.
We all know that people place their stops in predictable places, since humans are very predictable creatures. We like things to be orderly and we like nice, round numbers. I have no doubt that the huge drop shown on Clint’s chart was caused by a TON of stops (just above the 1.6000 level) getting triggered, but I still don’t understand why everyone thinks “big brother” is causing it to happen. I see the cause as the collective human psychology of a large number of people, not as a few people manipulating the market…
It’s really just semantics anyway. I say the price, without any one person or organization forcing it to happen, rose above 1.6000, but you say large banks/governments made it happen. The result is the same either way, so it really doesn’t matter who’s right.
You know [B]way [/B]more about economics than I do, so please tell me how that study is connected to stophunting?? I’m sure it’s just my own ignorance, but I just don’t see it.
Is my definition of stophunting different from everyone else’s? I don’t see intervention and stophunting as the same thing.
Stophunting is the intentional hunting of stops, not just intervention. When I think of stophunting I picture a bunch of bankers in a meeting room pointing at charts and saying, “Okay guys, we believe there are a lot of stops placed here, so we need to drive the price up to there and trigger those stops!”
I also picture them rubbing their hands together greedily and laughing (kind of like Mr. Burns from the Simpsons), but that’s beside the point…
Both might be circumstantial at best.
