How to be sure that your stop-loss is not hunted? :)

Hiya,

Is there any way to get sure that your stop-loss is really triggered and its not hunted? As I think in same second, two different Forex broker(even ECN ones, an definitely MM ones) can have two different price for same currency pair. So its not clear for me, is there practical way to check this or not?
I understand that if broker is ECN it’s good, but I’m looking a way to test, is there is any way?

I’m thinking paranoid and +++++++++ to my broker! :wink:

Thnx :kissing_closed_eyes:

Stop-loss hunting may or may not exist. If you trade multi-day, whether it exists or not is irrelevant as your stop might typically be an average day’s range away from price.

But say you are long and have put your stop at -40 pips. If you think your broker will drive price down to -40, put another buy in at about this level. So you get stopped out by stop-hunting at -40 but now you’re long at 40 pips below the underlying market. How long can any broker keep this game up?

Bu this is assuming they do it in the first place. Which I don’t fully believe. Isn’t it more likely you are putting your stop at an obvious TA level, where it is bound to be hit by a market reaction? Or you put it really really tight, so tight its within the “noise” zone of entry where random price fluctuation will take you out?

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I agree with you here, Tommor.

Let’s face it, with the small size that retail traders typically trade, no broker is going to pay attention to individual trades and single them out and move price to hit their stops. They have no need to as most retail traders lose money anyway through their own actions without any need for the broker to manipulate them. In any case, the broker will have many positions opening and closing which to some extent will neutralise their overall exposure anyway. They will only be concerned with the net overall exposure to movement.

However, there is the risk that a broker will, at certain times, widen their spread such that it broaches nearby TA levels, as you mentioned, and trawl in all the stops that might exist in that region.

But I agree with you that stoploss hits are probably most often the result of being too tight or too close to an obvious TA level.

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@campione your concerns highlight the importance of trading with a well-regulated broker.

For example, in the US, brokers must provide the NFA with details of the transactions initiated by their retail forex customers, and must adopt and enforce procedures designed to ensure the integrity of trades and to ensure trades are executed at market. There are only 4 brokers in the US currently authorized to offer forex trading to retail clients precisely because of these strict regulatory requirements which include accountability for the price where each customer transaction is executed.

Where do you live? Consider brokers regulated in major financial centers appropriate for your region.

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hiya,

thnx so much for advise. but shall we buy or sell in 40 pips lower? maybe trend is going down, so we should sell as its going down in -40pips at SL level?
could you advise me plz?

thnx :confused:

If you can’t determine whether the trend for your chosen time-frame is up or down, why are you wanting to enter at all? My recommended tactic is applicable only if the trend is definitely up but it could be reversed if the trend is definitely down.

If in doubt, stay out.

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As you mentioned yourself different brokers may stream different prices or spreads, even two ECN brokers are much likely to have small differences in pricing sometimes, but it’s just because they most probably have different LPs, from which they receive their quotes. However my understanding that they cannot differ that much as it we be suspicious :smiley: So if you notice anything like that simply request from the broker to give you more details of the trade or to check whether there has been any error on their pricing. Usually if it’s a genuine broker, it should be able to provide you with post trade information of your trade (especially if it’s about a FX trade). You should also have in mind that SELL trades are closing by the ASK price so you may not “see” the price on the chart (in MT4 the charts are generated by the BID price).
Besides that here is what Investopedia has to say about stop hunting: “A strategy that attempts to force some market participants out of their positions by driving the price of an asset to a level where many individuals have chosen to set their stop-loss orders.” So what @tommor said makes sense :blush:

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hiya,

how can I detect trend that is up or down accurately and its not going to ranging or consolidation and reversal signs is not appeared?

What indicator or price action or S/R method shall I use for this?

Its part of one of my strategies that I use, to only when trend is established and its enough strong, enter in direction of trend. Do you know what is more accurate way to detect this?

thnx

hiya,

its a clear advise, thnx :blush:
do you know by any chance that how to detect trend is established and have enough strength to go for a while, so I can jump in and place a position in direction of trend? how to know that trend is going to ranging or consolidation so I close it before reversal happen?

thnx:kissing_closed_eyes:

hiya,

thnx. may I ask whats their names? I live in Europe and travelling in capital cities between Europe: e.g. London, Berlin,… what do you suggest?

thnx

There is no way to 100% know the future. You can only be 60% sure or 70% or 80%.

Suppose you look at the last 60 bars on your chart. Is price higher now than at the end of the first bar? Then that could be an uptrend. Put in a moving average or two, let’s say a 10 and a 20. Has price been above the 10 and the 20 for the whole of the 60 bars? and has the 10 been above the 20 for the whole period? Then that is an uptrend.

We can also say that after another few bars, price is more probably going to be higher then than it is now: maybe not the next bar, maybe not the one after, but after say 5 bars, you can be 60-70% sure price will be higher.

If it isn’t higher but is going lower, then price will hit your stop and you will be out. Or if you see price is now ranging and consolidating, you can close the trade manually.

No indicator or S/R can tell you what price will do, but in a trend, the most likely outcome is that price continues in the same direction as the trend. That is why they are so useful.

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Below is a list of all four brokers currently authorized to offer forex trading in the US along with the amount of retail client funds each of them has on deposit as of the latest publicly available data from the CFTC.

London is the center of global forex trading. Consider firms regulated there by the Financial Conduct Authority (FCA). Any firms regulated by the FCA should display this information on their website as follows: http://on.forex.com/regulation

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Well, i define stop hunting as broker widening the spread to trigger your stop order.

If you are suspicious of your broker just divorce and get a new partner.
I think more and more trader are starting to get better at the game of forex trading.

Broker that are shady are not going to survive for long.
Stop hunting should be a less cause for worry nowadays in my opinion.

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I have actually seen some brokers widen spreads to 50 over the weekend. I thought that was extreme, probably wrong. Realize though that Forex, as well as options, are a variable spread market. You will have to try to account for the variable spreads. When there is more demand, the spread rises. Also realize that Forex is a very volatile market. I have seen it run down 40 pips and then back up 40 pips in a matter of minutes. That might feel like you have had someone hunt your stop. But, it probably wasn’t. Once, I was watching the S&P 500 options. Before a big news event, the spread went up to 600 dollars for a contract. The spread cost more than the contract itself. That was not even my broker. They are just a middle man in the options world and they provide the prices and allow me to buy from the banks, or someone else that sells options. If I bought into that, it is my fault. Are you starting to get the picture that options are a sellers world where it is a lot easier to make money selling options than buying them. :slight_smile: Imagine a person sitting at their desk writing a trade plan called, Sell options to dumb people version 1. Learn how the spreads work in your market, and take them in account in your trading. Also, seek to have a good risk to reward ratio in your trading, and your losses will become less important in your trading.

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there are two different questions in here?

  1. how to be sure that your SL is not hunted by your broker? (answer is to use a broker who transmit your trades to interbank market and does not trade against you)

  2. how to be sure that your SL is not hunted by very big players in interbank market? (answer is to put them in a different place from great majoirty of other traders, if you really wish to, one must decide)

but the real answer to your question is it depends whether the broker is a real one or whether they can profit by hunting your stop because they hold your trade on their own

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hiya @Piperazine

sorry, what exactly do you mean shall I do? hmmm :kissing_closed_eyes:

thnx

what kind of broker do you use?

does your own broker have a reason to hunt your stop loss?

are you worried that your broker will hunt your stop loss or that the big institutional players (“the market”) will hunt your stop loss?

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A week ago, or perhaps longer Campione posted here on BP that she was setting up her own trading company. Along with other questions, Campione was asking what country she could set up her new Trading business in for Tax purposes - and yet here she is asking how to place efficient stop levels on a website aimed at helping newbies learn the basics.

What the actual duck is going on here…

Perhaps I missed somthing…

Yea, it smells fishy, it is like mixed signals or something. If you are executing on just $100k you will know who your counter party is, so no hunting possible and if you were swinging large enough to be a market maker/broker/dealer, you would have lawyers and accountants to figure the (where would be the best place to open a?) so, as Alice said “Curiouser And Curiouser” and as the Door Mouse Said “Remember To Feed You Head” :upside_down:

The Ever Not Liking The Smell Of Rotten Fish VIPER

P.S. Or was that DeadMau5, well it was some kind of a Mau5.

Well spotted, chaps. I hadn’t noticed, but now that you mention it, there’s definitely something “up” with campione’s questions. Just part of what BP’s become, maybe? :unamused:

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