ok let’s put an end to this question once and for all “YES brokers hunt stops”.
The coding for it is simple.
If absolutevalue(yourstoploss - marketvalue) <.3pip then marketvalue=yourstoploss
That’s it … that’s all of it.
Inserted anywhere in the RESTv20 or FIX or automated platform’s code where measuring market value and your stoploss value takes place and if the market gets within .3 of a pip to your stop loss you take a loss.
Expand it to
If absolutevalue(yourstoploss - marketvalue) <.3pip or (somespreadsheetcell)=1 then marketvalue=yourstoploss
and your broker can hit a button putting a 1 in a spread sheet cell and stop you out anytime he wants.
The jump to market value is explain away as slippage or high volatility market movement during a news cycle … the broker usually says something like “wow you know what … tough break … if only” while he’s pocketing your money.
In many discussion this topic become so popular about stop-loss hunter, I ever hear one trader that share their experience about stop-loss hunter, which before price movement hit actual stop loss but automatically already closed the order, I think broker that has stop-loss hunter is dealing desk broker or bucket shop broker which they will happy if trader loss and will sad if trade win, because if trade loss hence they will profit
I trade through a large long-established UK-based and FCA-regulated spreadbetting company. Stop hunting is outlawed by the FCA and would be impossible to keep secret, easy to prove.
Of course, if they went ahead and tried to hunt my stop by boosting their own quoted prices up or down, they would leave themselves open to being taken to the cleaners by other traders looking to get in at a discount. They would lose far more from them than they could gain from me.
I trade with a large market maker Broker and have been for several years. They have too much to lose by dishonestly stop hunting or other tactics. It’s much easier for them to be the counter party to the majority of retail traders who naturally are on the losing side of trades. There is a reason why 95%+ traders struggle and that is fear and greed. Unless you are in the Millions of dollars trades in any position, your investment is a blip on the radar for any well established house.
Brokers LOVE traders who consistently profit as they trade MORE OFTEN. This leads to greater profits for the broker through spread and/or commission.
You only have to read back through some of the posts ~2015 to 2017 to realise…
That up until 2 or 3 so years ago… you older traders thought you were all swinging on the monkey bars in the true interbank market until the truth gradually leaked out that 99% of retail was trading via Market Makers and your broker was in fact the counterparty to all trades placed…
Unless you where true STP with a $100k plus account…
So you can place any spin on your particular view of Market Makers you wish…
Edit: Not saying I knew any better… I was getting in to FX when it all was coming out…
I think very importantly, to choose broker if already start using big money, but if only as retail trader might still not a too big problem if trading on market maker broker, because if trade on ECN broker need huge capital
You’re absolutely right about the kind of broker and the reason why stop loss hunting would occur bearish. The broker I am talking about is a marketmaker (Oanda). The programming is so easy that it is the norm for all bucket shops and market makers. Working from a platform just makes it less transparent because the coding is hidden behind a button.
I just wanted to put it out there so there wasn’t any confusion. Stop loss hunting is real … you’re not imagining it.
Not true … the small retail player is cannon fodder. He’s there to lose.
The large players want a return. Their capitalization is the bait that draws the small retail players in.
Market makers chase the small retail brokers all over the market stopping them out to get the return big players want. Any extra goes in their pockets.
For market makers the whole job is about cheating the small player out of his money. Stop outs though … mm’s should go to jail for stopouts.
Beau, c’mon now.
Not all brokers are bucket shops and stop hunters.
Ever heard of ECN and STP brokers?
What good is stop hunting to a pure agency (STP) model broker? Such a broker is not your counter in trading thus they will not profit from your loss.
This is where @CrisValenciana is correct - that kind of broker do love traders who win. It’s because they profit from commisions and fees. The more you win = the more you’ll trade = the more they will earn from commissions.
Simple as that.