Stop hunting is a perfectly valid part of trading so i dont really have an issue with it happening on ECN brokers. You should be aware of it and be careful in regards to exactly where you put them. This is a very different thing from the real issue of spreads being blown out randomly. The advantages of using an ECN is levels are supported by a lot of seperate entities so even if one liquidity supplier blows out their spreads you are less likely to get your stops triggered.
I use an ECN broker and I wouldnt use anything else. If you do use a normal style broker the only thing I can suggest is using an EA to manage your stops, so it will only stop you out when the spread is < 1.5 avg for that hour of the day.
I’m very interested in this topic Juergen and I’d like to ask you a few questions.
[ul]
[li]What is the optimal SL to use in Daily Trading?
[/li][li]Does it differ from pair to pair?
[/li][/ul]
They are not doing it specifically on your stop(they are looking to take out many traders stops). Stop hunting is a standard part of trading you just have to learn to get around it (or take advantage of it lol).
As I said in my first post, I only have months of experience in fx so I’m here mainly to learn rather than teach. However in this small period trading I have witnessed a few interesting things so I have to agree with those who think brokers manipulate prices. This week after the RBNZ rate announcement the 5 min chart provided by the broker I trade with had a hi/lo something like this 85.2/82.80 which is roughly 250 pips. In 5 minutes!! 2 funny things: I checked a few data providers and all had a range of around 60 pips in the same 5 min candle. The other funny thing is that on the following day when I looked at the chart again, the hi/lo had changed and reduced to some 80 pips. So the way I see it is they not only manipulate the prices they also manipulate the charts. Fortunately, even though I had a position opened in nzd/jpy I didnt set a stop loss or else it would have been triggered as it happened several times in the past with this broker…
I think i just found another argument on stop losses. During the last american report on payrolls there was a spike downward in very short time, which recovered immediately. Now i had put three stop losses on three trades to counter some losses i had made in december. Very short so the gap would close. The why and how doesnt matter, and please dont counter with you should only have one trade since three small ones equal just one big one just as well, please.
Now what happened here, in total if all three stops hit i should have lost 6 pips. Instead the loss triggered 40 points below due to what is stated as ‘price gap’. I informed with the broker, thinking a regulated broker would be forced to be insured against situations like that. Turns out they’re not. This might be something known to most people, its the first time ever it happens to me. Its in their policy, so, since they explained what happened im not complaining. However, instead of losing 6 pips, i lost 120 pips there. If it had been one trade with a bigger lot i would have lost 40 but the amount of cash would have been the same.
So instead of going up half a percent that day i went down half a percent (of total value) since the loss incurred came down to 1% of my account, more or less.
Nothing anyone can do about it and its in the agreement i agreed to when signing up so like i said, im not complaining but i was under the impression regulation is there for cases like this and insurance is there for situations no one can help SO
what im gonna do
is remove all stop losses forever during rush hour i think …
nobody’s fault, but im still down 0.5% instead of up the same …
fyi and consideration
Thank you for the info, my friend. Do such brokers exist any way? I mean why would these broker do things like that to clients without even wanting clients to be successful in their trading? It sounds really bad to me because I have not experience such unfair scenario since I have been using my broker.
I think you might be surprised about how many of ‘such brokers’ exist, frend. Its nothing personal, you see, what happened there was like a dam bursting somewhat, there was a very high volume of transactions in a very short time. Their policy states they cant be held responsible and [I]in fact they cant[/I] since its something hardware cant follow in this case. My point was i thought regulated brokers would be forced to be insured against this, situations that are unpreventable and nobodies fault since if i take this to an account with a million dollars, thinking im safe because i set my stop loss and this happens i would have lost A LOT of money in a second while i did everything to prevent that.
Insurance would be the only thing here i suppose if hardware of today cant keep up.
I dont blame the broker if they have price gaps when i take profit as well and they dont keep the extra for themselves in case of a win.
I blame the regulator on being incomplete
I have been stopped out a hundred times by a mere 1 to 3 pips only to see the price goes right back to my trade direction. I looked at other brokers charts and some are similar and some are not. Stop hunting is part of doing business. My accounts are still positive.
I never get stopped out unless price really hits my SL: Why ? Because my Broker doesn´t know where my SL-Level is : I would like to tell you how that´s possible but the Moderator of this site doesn´t allow it, so you´ll have to find out for yourself…
The software I was writing about a few weeks ago (my post has been deleted within a few hours and I´ve received a warning) costs a little bit of money (ridiculously low price, developed by a famous Forex-Trader : Vladimir Ribakov) but it can save you thousands of $$$ because Broker doesn´t see your SL-Level…
Get in touch with him or his team and simply ask and you´ll find it. Since I use this device I NEVER GOT STOPPED OUT WITHOUT A REASON ! Sorry, can´t write more about it…
Kind regards
You are correct. Sharing with us the name of those broker could be a better way and, it could of help to traders for the poster to mention the name of those brokers so that we do not fall victim in their hands. Although, I have never experience this with my broker but I will take proper notice of it if you such thing is happening there. I will advice traders to watch the kind of broker they are trading with.
But, why would a broker do that if they dont get the money you lose ? I dont know whats going on with who and what everywhere and what the conditions are you signed up for but afaik a broker would have nothing to gain by making you hit a stop loss. Instead they would lose clients faster since accounts would burn out more often and they dont get what you lose. They get a service fee on every trade you make (as far as i know, please correct me if im wrong im always up for more accuracy as long as people dont try to beat me with semantic sticks)
First off STOPS are essential, simple reason…If you are caught in the crash of 87 you can at least get the a chance to get out of your position especially as many new traders won’t be exclusively trading. I think we have heard of wipe out.
Second, this nonsense of Broker stop hunting. Most brokers are not market makers or inventory providers of any kind. So they cannot influence your stops. The market makers often test levels to shake off demand or supply before sending the market higher or lower. Note the market makers sole point of view is to buy at lower prices and sell at higher prices.
Most traders and that includes large investors usually enter trends near a congestion zone as a result when the market starts moving sideways the market maker is accumulating inventory and most of us decide to trade these congestion often referred to as a RANGE. The practice known as stop hunting is the market maker shaking off weak positions and sureing up the their own positions before a major move.
SOLUTION - Don’t trade congestion that way the market maker activity won’t shake you off like the weak link you are. Or simply widen your stop and reduce position size that way your stop is below a major resistance or support level. Market makers don’t F@@K with those. Or simply wait till the market maker enters his distribution phase then join in that way it is not likely you will get stopped out not even on any pull back as the market maker is happily selling into the market or driving the price down rapidly to start buying again.
STOP GIVING BAD ADVICE WITH THESE LONG MISGUIDED THESIS!
brokers are definitely manipulating the spread to trigger stop losses and kick people out of their contracts. NO WAY around this fact. and of course all the brokers have their own positions. they don’t manipulate the quote but the SPREAD!! big difference. a normal spread of 2-3 pips sparks up to 20 pips for a second and goes right back. all stops in this renge being triggered. and i’m NOT talking about volatile market times, news events etc… - regular trading! this is COMMON PRACTICE!
This happens way less on ECN based brokers as there is not just one firm involed in the price. You get the added advantage also that getting your TP hit is way easier too.
You can also manage stops off market using an EA with spread rules to stop you from aggressing the market when the spread is crazy.