Big players aiming for stop losses?

do you guys think that the big players manipulate the market to make the price hit stop losses that forex traders place?

I often wonder if they create fakeouts - where you get a strong candle and it looks like a breakout and then it reverses and moves quickly in the other direction.

Buyers always want a better price…lets say a coming up move seems obvious, but buyers have not acumilated many longs. They like to spike price down to gather up more positions at a lower price…then it takes off. I think hitting stops is just an added bonus. (same thing in the opposite direction too of course).

I read somewhere that a 0.5 billion trade doesn’t make a ripple in the market. If that’s true it would take some serious capital for brokers to be able to move the market in the opposite direction of their clients to trigger their stops.

One guy told me he worked for a bucket shop, and actually had a separate key pad to markup or down price for clients. Happens all the time, spikes on one broker and not the other.

I wouldn’t be surprised if smart money marked price in a manner to shake out people on the wrong side of the market. They don’t know you so they don’t care if you lose money. In other words, expect them to gun for stops to bolster their positions and plan your strategy around it.

It’s quite possible that marking price up or down can happen during a time where there is low volume. The daily turnover is in the trillions, but I would suspect a SINGLE trade of $500,000,000 in only a single pair would affect the market temporarily.

i don’t think this is done to be honest. i think it’s a myth thats circled forex forums for too long

I guarantee you that stop running is done by big players in the markets. It may not be done by retail brokers in anywhere near the way it’s been suggested, but it definitely happens in the inter-bank market. It happens in all the markets, and always has done. Ask any futures pit trader and they’ll tell stories about trades making runs at levels they know there are clusters of stops sitting at. That said, it takes some power to be able to make the market move like that and there’s no guarantee of things working out profitably.

John (rhodytrader) is exactly right.

Here on this forum, the subject of stop-hunting comes up regularly, every few months.

Here’s more on the point John was making, from a discussion posted here last June — 301 Moved Permanently

if you notice that before price makes a large break eitherway, price typically does the opposite first… sucks you into a bull / bear trap and then bye bye…

If that were true you could trade on the premise that there will be regular erroneous spikes and set buy limit orders much lower than the trend and therefore hit a nice trade everytime the broker introduces a sl hunting spike.

I notice that mostly before news. I attributed it to the closing out of positions prior to the announcement, instead of a more malicious act.

lol, I would not atempt to make a method based on that.

Now if you want to talk about news…from my VSA view, I see why news reaction will initially spike one way, only to be bought or sold into so it soon reverses to a large move the other way. I look at the reaction the inital news move, NOT the inital move, to see what big money is really doing.

Let’s say big money is positioning for shorts, if the news release is positive, they will let it spike up TO GET BETTER PRICES FOR THEIR SHORTS. It’s acutally very logical, and just happens to kill the noobs who chase price.

Stop Hunting as such is just not possible, it could/can be identified if you had different price quotes form different brokers, simple as that. However it doesn’t mean to say that no broker will rip you off, the point is it is much easier to do this with slippage rather than stop hunting. Stop hunting in itself just doesn’t make sense.

I’m with you PurplePatch.

Stop hunting would show up as strange random spikes that vary from broker chart to broker chart wouldn’t they?

I use a variety of charts, and they vary, but never more than a couple of pips. Nothing more than a different “last” number. One may have a buy, and the other a sell, and that be enough for a very slight difference.

If there’s a spike, I attribute it to a massive sell or buy from the institutional side as opposed to an attempt by my broker to clean me out.

Exactly, another thing I noticed as well is that you only tend to remember the ones where you have been stopped out by 1 PIP and not stayed in by 1 PIP.

this is what I noticed a lot recently. This week I tried to focus on what they would be doing around Non-farm payrolls on Friday so I traded the move each way over a 1 min time frame and made money in both directions. This information was very helpful in knowing how to ‘play the game’.

THANKS GUYS! :smiley:

While it’s true that stop hunting by individual brokers could be easily spotted, the real stop hunting is done at a higher level - in the inter-bank market from which the brokers get their base quotes. As such, you won’t see it in variations in broker quotes.