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Mastering Trade Management / Stop hunters

  • #1
  • First Post: Edited 8:20pm Apr 26, 2019 8:07pm | Edited 8:20pm
I always hear from others the essential needs of becoming a profitable trader you will need to know these things:
1. Technical Analysis
2. Money Management
3. Psychology

but yet I don't see anyone talk about Trade Management. One can have a correct analysis for the future direction of a particular currency but when you open a trade and managing that trade is extremely difficult. Especially when dealing with Interbanks. Placing your stoploss and still going based on the rules of money management having correct win risk ratio is one of the most difficult aspect of this business. What I mean by difficult is there are times where I placed my stoploss at certain area the market turned "just to hit my stoploss" before going towards the direction I wanted. Making me think the market makers are hunting for those stops. So when mastering trade management you would do what's necessary to dodge these stop hunting events. Here are some charts on when I got stopped out of my trades to the PIP!! I would like input of profitable traders regarding this and their experience and knowledge.
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  • #2
  • Apr 26, 2019 8:08pm Apr 26, 2019 8:08pm
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  • #3
  • Apr 26, 2019 9:57pm Apr 26, 2019 9:57pm
I feel your pain....it is one of the things I hate the most about trading. What I found was helpful was this:

  1. Perhaps the market is telling you your entry is a bit too soon? Or
  2. Perhaps you are tightening your stop too soon or too close

Either of these possibilities requires that you keep detailed records about why you enter where you enter or why you decide that it was time to move your stop and where you decide to place it.

Also if this is happening with regularity then perhaps (as I do now) you can simply anticipate that move and leave your stop a little deeper until you see that move complete and the return in your direction.

I affectionately refer to these moves as "crazy Ivan" or the "F*** Y** stop"... I Know how frustrating they are.

The good news is this is progress (believe it or not). It means your entries are in the right place and the right direction...you just have to "dial in" the right time.

Best of luck...you seem to be doing better than you think.

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  • #4
  • Apr 27, 2019 6:42am Apr 27, 2019 6:42am
This is why more than 90% of traders lose monet. We are too tuny for the great sharks that know our stop levels.
  • #5
  • Apr 27, 2019 7:09am Apr 27, 2019 7:09am
in 80% of the times the price do cycles so its 80% of the time about technicals if you are not that much into business of this game
cycles of the price lasts for years or for months or for weeks or less, some noobs call these cycles "setups" these cycles happen and get repeated because investors and companies ar doing business, some others are hunting but dont give a damn about them because you will never know who they will hunt next, and they follow the money flow they dont follow your stops

mm is a pure math, mm need nothing expect some math operations to see how much you gonna risk and how much you gonna win, "profit factor, win ratio, etc..."

psychology in trading is just a myth or noobiness or a trap from the hunters, as i said before investors and companies doing biz

thats what i think
cheers
  • #6
  • Apr 27, 2019 7:14am Apr 27, 2019 7:14am
when brexit get announced the pound get down hard
so is that about psychology ?

that can be psychology only in america
  • #7
  • Apr 27, 2019 7:17am Apr 27, 2019 7:17am
Let them act first.
POW!
  • #8
  • Apr 27, 2019 10:55am Apr 27, 2019 10:55am
Quoting DonPato
I feel your pain....it is one of the things I hate the most about trading"crazy Ivan" or the "F*** Y** stop"... I Know how frustrating they are. The good news is this is progress (believe it or not). It means your entries are in think.
yes you’re absolutely right and don’t get me wrong this doesn’t happen a lot but once in a while it does that it makes me think something or someone decided to hunt stop. Thankfully most of the times my entries are flawless but I’ve been trying to master the managing of the trade which I’ve been doing very well so far, to move the stops the right time is very important yes we do need to give the market some room and not tighten stops too soon because it most likely gets hit and it’s true that if market has reached a price point it may reach that same price again in a short period of time that’s a very important thing to know.
but main question comes down to is there such thing as stop hunters? Or it’s simply a myth and it’s just a random event....
  • #9
  • Edited 12:04pm Apr 27, 2019 11:53am | Edited 12:04pm
Quoting Robot
... but main question comes down to is there such thing as stop hunters? Or it’s simply a myth and it’s just a random event....
The short answer to your question (IHO) is: "yes, but not in the way you think".

"Stop hunting" does exist but for those of us in the retail side of things, those stop hunters are you broker. Remember you are essentially playing a poker game with your broker with all your cards exposed. Your broker is the counterparty to your trade and also has the advantage of being able to see where your stops are placed as well as manipulating YOUR quotes to widen the spread just enough to take your stop. Even if the rest of the market never made it that far or came to within a few (<10) pips, your broker can easily widen just your (or anyone else's, or everyone else's) spread just enough to take your stop and consequently, your money.

BUT...

The overall market must first make it close enough for the broker to do this, otherwise he/she/it will get "caught" with their hand in the cookie jar.

The other half of this equation is order flow...one must keep in mind that order flow/volume are the primary reason why prices move the way they do. Thus if price returns to an area (many technicians call it a "retest") it is because this area is where the orders are placed. Remember that market orders are filled with pending orders...Party (market) and counter party (limit).

For example, in the case of the charts you have shown. There is (seems to be from looking at your charts) some significant interest in selling. Most likely because longs from below the market are now taking profit. Your method appears to identify these areas well. Many of those moves down (that initially cause you to tighten your stop) are simply longs - stopping out.

But there is another wave of shorts waiting to be filled back where that area first started...where you first got in. So with all this interest in selling, they will need buyers to be their counter parties. So the question becomes, "where are the buy orders?" Answer - your stops. And just to be clear it isn't just YOUR stops...you are most likely one of very many, who all have their stops in basically the same area. So if that area has more buy orders than any other area...price will be quoted in this area to fill the large supply of sell orders. Since the market has no other choice but to fill market with the "closest available" counter order, price returns to fill the supply with demand.

Unfortunately your demand is part of that...thus the "F*** Y** Stop". It seems malicious but it is just market structure playing out.

The fix, as I mentioned before, is to anticipate this "retest" and keep your stop out of the way, OR, simply wait to enter and then enter on the "retest". Your method seems very well adept at finding these areas...since this issue NOT consistent I would suggest that you use your stats to determine a better rule set for rolling your stops, or even add-in to take advantage of this "inefficiency". But only you know how often this occurs with your trading method, and under which conditions. As well you could use a smaller time frame to determine an earlier exit to take a small profit and then re-enter again at the retest. 2-for-1.
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  • #10
  • May 23, 2019 9:22pm May 23, 2019 9:22pm
Quoting DonPato
{quote} The short answer to your question (IHO) is: "yes, but not in the way you think". "Stop hunting" does exist but for those of us in the retail side of things, those stop hunters are you broker. Remember you are essentially playing a poker game with your broker with all your cards exposed. Your broker is the counterparty to your trade and also has the advantage of being able to see where your stops are placed as well as manipulating YOUR quotes to widen the spread just enough to take your stop. Even if the rest of the market never made it that...
Just like Nick, I find you also very knowledgeable in orderflow concepts. My head literally spins when I think "inversely" on what the "other side" will do with my order. Your mention of party=market and counterparty=limit order is spot on BUT I have yet to receive a legit response to my question that I often ask myself and to others.

What will happen if a regulation comes out BANNING pending limit orders? If EVERY trader (retail and pro) is forced to enter only Market Orders with no Stop Loss or TP? What will the impact be on the Market efficiency and to all such OrderFlow types strategies?
Am I right in saying:
There will literally be no order book
There will be no Market Depth
There will be no support/resistance, no pattern formations, no supply/demand levels, no gaps getting filled etc etc
Market will cease to exit? I am not sure about this but it will become 100% unpredictable and 1000% random. Right?

And finally, I fail to understand WHY a sane retail trader would even attempt to publish their SL and TP to his broker/counterparty. That is deliberately committing suicide for your account imo. Am I wrong? There have been literally countless times in my early years when price would 'appear' to move only towards my SL only to be taken out and then move away from it. We have ALL seen this happen a 1000 times and yet everyone out here and elsewhere is a proponent of using SL to manage this risk. Regardless of which side of supply and demand equation is stronger, price is ALWAYS gravitate towards resting orders. Am I wrong is saying this or am I right and everyone is wrong? Help me understand please. I seem to be at odds with everyone out here which makes me wonder!
Staying in my lane...
  • #11
  • May 24, 2019 1:39am May 24, 2019 1:39am
The market is driven by fundamentals, it had nothing to do with your stop being hunted. You were on the wrong side of that trade selling pound against the Swiss Frank on the back of these news events

https://www.forexlive.com/technical-...kstop-20190409

https://www.forexlive.com/news/!/bre...kstop-20190409

https://www.forexlive.com/news/!/uks...itive-20190409


To hunt stops takes a lot of money and if they pushed up price by buying, they would need the market to push it up more to yield a profit. It just doesn't happen outside of bucket shop brokers who are the market. It isn't profitable and they would rather make money on the spread and trading news flow.
  • #12
  • May 24, 2019 1:46am May 24, 2019 1:46am
Quoting EcoTrader
The market is driven by fundamentals, it had nothing to do with your stop being hunted. You were on the wrong side of that trade selling pound against the Swiss Frank on the back of these news events https://www.forexlive.com/technical-...kstop-20190409 https://www.forexlive.com/news/!/bre...kstop-20190409 https://www.forexlive.com/news/!/uks...itive-20190409...
Agree... this happens more in the bucket shops than centralized exchanges matching millions of orders every day BUT if you are trading decent sized contracts then this becomes a crucial part of the equation. Big is corelated with liquidity and liquidity is just that... Liquid, it can drop or grow in a heartbeat so "reading orderflow" and then deciding if my SL is too big or small to get hunted is not a smart move imo. With all the algos we hear of regularly spoofing the orderbook in milliseconds, it becomes ever harder to rely on such mechanics.
Staying in my lane...
  • #13
  • May 24, 2019 9:43am May 24, 2019 9:43am
Your post really got me to thinking and I had to admit I'm really unsure but after thinking about this for awhile, this is how I speculate it might function.
Quoting VEEFX
...What will happen if a regulation comes out BANNING pending limit orders? If EVERY trader (retail and pro) is forced to enter only Market Orders with no Stop Loss or TP?
The very idea of banning pending limit orders would (IMHO) eliminate the ancient idea of commerce. Going WAY back to the beginning of any market, those who had something to sell, would display them with a price. This is the very first "offer". Without this, there IS no market in the traditional sense. However, IF this same entrepreneur was allowed to at least advertise that he had something for sale (no price declaration), the auction market might again occur with only market orders. Something like this:
Buy: Without any other "market" sell orders, price would rise dramatically looking for a sell order...and with NO pending limit orders, the market would have to wait until a market sell order occurred and match it on volume only, NOT PRICE!. In other words...I want to buy 3 apples, and someone with three apples or less must meet my order, until it is complete...any remaining buy order will continually lift price until the order is satisfied.
Sell: The same would apply to any "lone" sell order that is left unfilled...price would drop precipitously until the order is filled.
Result: Volatile and wild price swings and a very UNstable market, in so far as price stability is concerned.

In the modern world I can imagine that computer programs would be written to essentially create algorithms to "mimic" limit orders but like current stop orders...they would trigger a market order instead. Which would increase price volatility and (IMHO) instantly destroy anyone who doesn't have very deep pocket to absorb the volatile price swings. And with this...margined accounts would completely disappear.

Quoting VEEFX
...Am I right in saying: There will literally be no order book There will be no Market Depth There will be no support/resistance, no pattern formations, no supply/demand levels, no gaps getting filled etc etc Market will cease to exit? I am not sure about this but it will become 100% unpredictable and 1000% random. Right?...
Yes I think this would be true...however it might calm a slight bit with computerized algos that flood markets with opposing orders to keep price stable...even if they are not all filled...

In addition this could lead to GROSS market manipulation. Knowing there is no order book someone could spike prices up or down, by simply entering a large order (which in the end would be cancelled) when price gets to the level they wish to transact at...and likewise, then with another large order, move price in their favor to reap huge benefits. Again DEEP pockets would be the only winners. You or I would lose everything in the first day.

Quoting VEEFX
...And finally, I fail to understand WHY a sane retail trader would even attempt to publish their SL and TP to his broker/counterparty. That is deliberately committing suicide for your account imo...
I agree with this 100%. Especially with FX brokers. Many (including myself) use programming to send market orders to exit positions especially when trading intraday. Usually I trade FX with larger charts and much wider stops. So any broker that "spiked" price by 75-150 pips would instantly be exposed and would much rather settle with me than risk exposure. This is why I moved off to Futures for intraday trading. While I'm confident that the size of my orders is still "held in the bucket", US Futures brokers are required by law to be transparent and I have clear legal recourse if I think that isn't the case. Again because the issue is such a minor one (in my case), they would far prefer to just settle the matter and keep the good name of their business than risk an SEC complaint.

Quoting VEEFX
... Regardless of which side of supply and demand equation is stronger, price is ALWAYS gravitate towards resting orders. Am I wrong is saying this or am I right and everyone is wrong? Help me understand please. I seem to be at odds with everyone out here which makes me wonder!
I too have made this observation and feel the same way as you do when speaking to others. Many prefer the "conspiracy" theory where some malevolent organization is "out to get" their 5 mini lot position...the entire idea is ridiculous on its face. However, they are stopped because they place their orders along with every other "technical trader" within 20 pips of each other in the same general area....and Viola!! it attracts price like a magnet...WHY, because that is where the orders are for a counter position. So if a group of stops on a long positions (in other words a group of sell orders) Are all placed in a certain area...and another larger buy order comes in (similar in size to the aggregate stops), the market MUST fill the order and BAM...stops hit...larger order filled...price rises and you get taken out by the "crazy Ivan"...or what I refer to as the F*** Y** stop.

Inserted Video


I'm not sure this answers your question(s)...but that is my very speculative view.
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  • #14
  • May 24, 2019 11:08am May 24, 2019 11:08am
Quoting VEEFX
{quote} Agree... this happens more in the bucket shops than centralized exchanges matching millions of orders every day BUT if you are trading decent sized contracts then this becomes a crucial part of the equation. Big is corelated with liquidity and liquidity is just that... Liquid, it can drop or grow in a heartbeat so "reading orderflow" and then deciding if my SL is too big or small to get hunted is not a smart move imo. With all the algos we hear of regularly spoofing the orderbook in milliseconds, it becomes ever harder to rely on such mechanics....
There is no orderbook in Forex, while broker can create their own Market and technically see the local orderbook it doesn't have any value as most of the liquidity is not visible to them.
This is also valid for FX futures, there are many Algos out there trading arbitrage between various exchange.

Orderbook is only valuable if the asset is traded in only one place. You can see the full picture.
i lose money for a living
  • #15
  • May 24, 2019 11:25am May 24, 2019 11:25am
Quoting tylerbose
There is no orderbook in Forex, ...
This may be true perhaps...but there IS depth of market in the interbank FX market. This is, for all practical purposes and functional "order book". Even though it is decentralized and occurs only at the highest levels of interbank world wide...these levels filter down to the rest of the market. What is lacking in this depth of market (unlike an order book) is transparency. FX interbank depth of market liquidity is "anonymous". Where as order book transaction have to be accounted for at the end of each day, (in some cases they have 48 hrs, and in some cases 12 hrs). This "clearing" of orders is required to show who, when, how much, and P/L realized. FX market does NOT...just that the transactions are "cleared" through some bank.

This is the very basis of larger level money laundering. The biggest exchanges of money are between banks, who don't necessarily have to disclose whether it was a client or their own bank that made the transaction.
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  • #16
  • May 28, 2019 9:15am May 28, 2019 9:15am
Quoting DonPato
Your post really got me to thinking and I had to admit I'm really unsure but after thinking about this for awhile, this is how I speculate it might function. {quote} The very idea of banning pending limit orders would (IMHO) eliminate the ancient idea of commerce. Going WAY back to the beginning of any market, those who had something to sell, would display them with a price. This is the very first "offer". Without this, there IS no market in the traditional sense. However, IF this same entrepreneur was allowed to at least advertise that he had something...
Thanks Don. I am glad it make you think a little lol. Such Questions really help us think and understand the foundational level of how markets are made. Quite insightful response as I dip my toes slowly into volume analysis. Here's another one.

CME employs BIG market makers (Citi, Goldman, UBS etc) for orderly function of markets and to provide liquidity. They obviously trade against each other as well as coordinate crap against retail traders in some manipulative/algorighmic matter.

 

  1. Do the regulatory bodies legally ALLOW these market makers to coordinate their Market Making business or is that considered illegal?
  2. Do regulators enforce FIFO and no Hedging rules to these market makers also similar to all market participants (on CME as I have been looking only at NQ in futures thus far)
  3. And now my hypothetical question. What will happen to the "orderly function" of markets if these Market Makers are allowed, by law, to only trade one direction. Either Long or Short directional trades on any underlying with FIFO and no hedging enforced? Will they continue to make markets or will they all go bankrupt?
  4. Edit: one more.... since NQ is a "calculated index" based on stock market valuations, do these marker makers get involved in "maintaining" this mathematical calculation to avoid arbitrage opportunities as one of their primary objectives of maintaining "orderly function" across the centralized exchanges. I am sure algos are involved to maintain this mathematical equivalency at all times but who owns this primary responsibility? Perhaps efficient market hypothesis across all market participants somehow maintains this. not sure.
  5. Edit: Also, I had asked this question earlier and no one responded. How do we measure a drop of 1 Tick in NQ to it's overall impact on market valuations of underlying Nasdaq 100 stocks. There has to be some correlation between the two. What is that or where can I find this information?

Staying in my lane...
  • #17
  • May 28, 2019 2:11pm May 28, 2019 2:11pm
Quoting VEEFX
Do the regulatory bodies legally ALLOW these market makers to coordinate their Market Making business or is that considered illegal?
I honestly don't know. I would venture to guess that it is considered ILLegal. Coordinating action to bring about a mutually beneficial result that excludes the "normal" market participant (like retirement or hedge fund managers), would clearly be "fixing" and the SEC is charged with regulating and enforcing against that very thing.

Quoting VEEFX
Do regulators enforce FIFO and no Hedging rules to these market makers also similar to all market participants
Since we are talking about the CME here, and that market is regulated by SEC I say "yes" they do enforce this rule. In fact it was the NFA that brought about and supported these regulations because they couldn't compete with the FX (wild west) lack of regulations. They did this to level the playing field between the two markets...later (after the big crash in 2007) they also limited leverage for FX brokers. The end result is that the majority of US FX brokers left the US and most legitimate FX brokers don't accept US clients.

BUT this rules does NOT limit the number of accounts one can hold. So if hedging (defined as opposing positions on the same instrument at the same time) is part of your strategy, it is lawful to keep one account for shorts and one for longs. FIFO remains strictly enforce across all brokers (the logic of which, still escapes me).

Quoting VEEFX
What will happen to the "orderly function" of markets if these Market Makers are allowed, by law, to only trade one direction.
This law already exists, especially among brokers with certain clients. Retirement accounts, ETF's, etc. They are only allows to place their client's money to work in a unidirectional environment. It is hedge funds and other "self directed" accounts that are allowed to engage in "naked" shorts. The markets still function in a stable fashion.

As to the remainder of your questions, I afraid that goes above my head and I honestly don't know the answer. I'm unsure if it would have any relevance to my way of trading or not. Pontificating on how or why price moves up or down a tick in a calculated market is of little use to me and would not change how I trade or look at the markets even if I knew.

I'm having difficulty understanding your point on your "what if..." questions. I find it better to concentrate on what IS and if I can find out why and use that to my advantage, that makes it all the sweeter. The idea of an "efficient" market I think is a misnomer. Inefficiencies occur every day and are what cause prices to rise or fall. However on the grander scheme, large trends are usually caused by large interests who are responding to suspected or actual fundamental changes in the instrument they are engaged in. Example - Carry Trade.
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  • #18
  • May 28, 2019 2:22pm May 28, 2019 2:22pm
Quoting DonPato
{quote} I honestly don't know. I would venture to guess that it is considered ILLegal. Coordinating action to bring about a mutually beneficial result that excludes the "normal" market participant (like retirement or hedge fund managers), would clearly be "fixing" and the SEC is charged with regulating and enforcing against that very thing. {quote} Since we are talking about the CME here, and that market is regulated by SEC I say "yes" they do enforce this rule. In fact it was the NFA that brought about and supported these regulations because they...
Thanks Don for putting up with my questions. I prefer to know most of the unknowns lol so mostly education for me as part of my journey into futures.

I believe CME is regulated by CFTC and not SEC but I could be wrong. Secondly, we still cannot hedge via multiple accounts because of the Wash Trade regulation. One has to take un-hedged directional exposure in markets. Even if you try to put two long and short "pending" orders in the market, that will eventually trigger a wash trade violation and your broker will contact you at end of market close right away. It happened to be on Day 1 of live trading so I know (well, it all fairness, I was manually and rapidly sending and cancelling pending orders to trap price so it was never a wash trade but whatever... who can argue with compliance!)
Staying in my lane...
  • #19
  • May 28, 2019 3:27pm May 28, 2019 3:27pm
Mastering " Trade Management " is a good idea. But not " Stop Hunters ". Forex is a zero sum game. One should lose to one to win. So this is the nature. I heard many traders say i got stop hunted (blaming others). Damn, if it went on their side then they say "look my analysis". This is not a fair game. Every one not come to win but to earn.When you enter you need to prepare.That is why we always need to think down side rather than gain side. Because gains are natural and cannot control but you can control your downside. By the way you can trade millions ways to earn money. Even by tossing a coin, If you make money that is the point. Because all traders end goal is money. So we should earn money not to prove we are right. Most traders got wrong on that point. They always try to prove that they are good and always right. I don't blame on that, that is good. but remember end goal is money. So it does not matter how you earn. So my point is never ever focus on preventing stop loss hunting. Prevent on loss large when loosing and try win large when wining. But this is my frame work. You can have your one. As always said millions ways to trade. Sorry for my bad English.
" People don't care about what you say, they care about what you build "
  • #20
  • May 28, 2019 8:03pm May 28, 2019 8:03pm
Quoting VEEFX
... I believe CME is regulated by CFTC and not SEC but I could be wrong. ...
You are absolutely right...my BAD!!
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