How Do They hit my stop exactly?

Several times price has shot up out of nowhere exactly to my stop loss and than retreated, all within seconds. I know banks will run stops but it's amazing to me how often price shoots to my exact number. Is this normal, is everybody else having the same experiences?


Rex

What is your stop loss?

It was 23 pips away on this one. Trend down for several hours than popped up 23 pips and resumed down trend.

http://img413.imageshack.us/img413/2...plossesyt3.jpg

just bad luck man, or maybe good luck really. I'm with InterbankFX and the spike shows up on my charts so it's not a broker thing. In my experience, these spikes are caused by a sudden huge buy by one of the big players. And looking on the 4 hour charts, you can see that the trend is now up, which is why they bought. So maybe it was a good thing you got stopped out?

I think everybody has this experience, from similar comments not only on forums, but also from forex professionals in books & articles, etc. Joe Ross mentions stop-running a lot.
When it first happened to me, I used to think, "Why on earth are they bothering to run the stops on my piddly little orders?" I used to go check the charts with another broker, just to confirm that it was real. Often you can see that it is just a momentary spike - even on a 1 minute chart. Then I came to the conclusion that the reason may be that I am placing my stops at the places everybody else has their stop orders also. Once I figured this, I changed my strategy.
First, I tried putting my stops at the next level out. Problem with this is, that when you get stopped out you just lose double the amount. Can work if you are good about your calls on the L/T direction.
Another possibility is not to place stops. Well, I won't recommend this one - though I've tried it, and at times successfully. It is worse if it works - then you get sucked in to thinking it is a great strategy, and then one day, Boom! your account is gone in the blink of an eye. Some people apparently manage to trade successfully with no fixed stops - maybe it is ok if you have a big account and only trade very small parcels.
The best way I've found, though, of using the practice of stop-running to your advantage is to set limit entry orders - the Aussie isn't usually so bad, but with EU and GU, you can almost guarantee that before a major run up, there will be a stop-running spike down to test previous support and below, and vice versa.
BTW, it works the opposite with your TP orders - almost invariably they will get missed by 1-2 pips.
I think you just have to ride with it, experiment, and learn what sort of stops you can live with, and then how you can use it in your trading strategy.

OK, How do you calculate S1,S2, R1, R2 Etc.
If you do it the same as everyone else then you end up with the same number.
How do you calculate your SL?

Thanks for the input guys. It really is amazing how exacting pricing is when it works against you. I often just have to sit back and laugh. As far as setting my pivots I use GMT and the auto calculator on mataf.net. They are a small consideration in setting my SL. I typically try to gauge reasonable price action given the trend I'm expecting and set from there. This was a 23 pip spike that lasted seconds! LOL. Like you starfire, I try to set beyond a basic stop run. Historicaly 23 pips away on the Aussie would be well out of reach. Oh well. Nothing is impossible in Forex. Maybe I'll earn it all back tonight!

I agree, there is a tendency for SL orders to cluster, and believe it or not, you could be right on target more often than not.

While broker stop hunting IS common, brokers know extremely well that the only way to avoid ANY risk would be to completely widen the spread in order to hit their "targets". If they don't do this, then what occurs is known as price arbitrage which could easily and justifyably be used against them should the price return to their previous levels (instead of continuing up to their price target).

So, while it's possible that the broker induced the price spike without risking their own capital ("feed fudging" as I like it call it), their risk exposure would be WAY too great should someone be able to capitalize on the other side of the spread.

You can verify the feed using multiple feeds. If the price spike is very different, then the broker obviously took a big risk (unless of course, they inflated the spread as well to negate the arbitrage). Obviously, from a political stand point, feed fudging and widen the spread are highly disagreeable with the customer base, and the broker risks having their money "run" from them.

That makes sense. aicccia said his charts had the same spike and pricing is only one pip away from the spike so it probably saved me 3 hours of anquish wondering if I was going to be stopped out. I agree with you, I wouldnt think the broker would have much to gain by blasting there clients. I would think our success would be in there best interest especially with the profits they make on the spreads.

Rex,

That's rather enlightened of you to come to your realization, for certain.

I still struggle with every time I see price reversals down to the pip (either to hit my SL or avoid my TP or stop entry). Ugh...just thinking about it makes me sick.

Brokers DO actually have a motivation to cheat you out of the money, but they have a GREATER motivation to keep clients generally unaware of their tactics. It's to easy to uncover feed arbitrage, so that's why they don't use that tactic. They use less invasive methods of preserving their capital when it's at risk (like widening the spread or consistently requoting), and while it annoys the f-ck out their clientele, generally, clientele are willing to accept those risks because the clientele that don't are the ones that brokers really don't want to keep anyway (small money or opportunistic money [scalpers]).

I posted this sometime back, but the amount of money that is made on the spread when the broker has to sell up a tier is VERY little since they incur their own trading costs.

Providing your own liquidity is where they make the money because they can house LOTS of client losing positions (meaning the house wins) and then turn around off-set their risks by selling those positions at a better price to a higher tier (their liquidity provider).

Now that's a perspective I wasnt aware of. Hmm.