Hide your SL from stop hunting | Forex Factory

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Hide your SL from stop hunting

  • #1
  • First Post: Mar 30, 2009 1:09pm Mar 30, 2009 1:09pm
I have figured out a nice way to hide my SL entries from the broker so I can avoid stop hunting. What I do is instead of placing the SL within my order I use a mobile price alerting service to notify me when this price is reached. Then when the price reaches this level I receive a SMS alert on my cell phone and I either call my broker to close the trade or if I am near my computer I close it myself. Personally I do not leave trades open overnight and even if I do sometimes I feel more comfortable to wake up from the alert on the cell phone and close it rather than get hunted by the broker.
  • #2
  • Mar 30, 2009 1:32pm Mar 30, 2009 1:32pm
I was under the impression that it's not that actual SL order that they hunt, so much as it is the obvious prices where SLs are placed, so closing a trade manually at X price is essentially the same as putting a SL there. Either way they moved the market past the price where they knew SL orders would be and you (not you personally, but any retail trader) get burned by closing your trade only to have it turn around quickly.
  • #3
  • Mar 30, 2009 1:37pm Mar 30, 2009 1:37pm
Quoting smittens4212
I was under the impression that it's not that actual SL order that they hunt, so much as it is the obvious prices where SLs are placed, so closing a trade manually at X price is essentially the same as putting a SL there. Either way they moved the market past the price where they knew SL orders would be and you (not you personally, but any retail trader) get burned by closing your trade only to have it turn around quickly.

that makes more sense than this stop hunting nonsense, but in any event, it's not the brokers doing it. it's large institutional/bank traders. a broker hunting your stop earns no money from taking you out of the trade. it doesnt work that way. they get paid on the spread from the trade, not how much you win or lose.

you are right that people do hunt stops though. a institutional trader with a large amount of capital or maybe a trader that works for a bank/financial institution would drop a large order to fill at one of the levels that they know stops are gonna be at. this makes the price jump to those levels and gets these guys a nifty little profit.

basically, if your stops really are getting hunted, take solace in the fact that you really ARE part of the proverbial 95%, seeing as you put your stop where everyone else does too.

happy trading!
  • #4
  • Mar 30, 2009 1:43pm Mar 30, 2009 1:43pm
How I understand the stop hunting is that the broker generates an artificial spike to trigger all those SL. So if I don’t place a pending SL order on their platform it will not be executed. At the same time I will not get alerted on the cell phone because this artificial spike will not occur on the alerting price feed. What do you think? Is it a safe way to get protected?
  • #5
  • Mar 30, 2009 2:03pm Mar 30, 2009 2:03pm
You're basically using a mental stop. Don't expect to get out at the exact level you would want to place your SL if you go this route. Think about a fast moving market and how quickly it can race through levels at times. Think about how long it will take you to dial your broker, get someone on the phone, articulate to them what you need to do, and then actually have them do it (or get to your computer, fire up your trading software, and execute an order).

Just realize you may incur additional losses at times and they might be severe.
  • #6
  • Mar 30, 2009 3:00pm Mar 30, 2009 3:00pm
Quoting thegunslinger
You're basically using a mental stop. Don't expect to get out at the exact level you would want to place your SL if you go this route. Think about a fast moving market and how quickly it can race through levels at times. Think about how long it will take you to dial your broker, get someone on the phone, articulate to them what you need to do, and then actually have them do it (or get to your computer, fire up your trading software, and execute an order).

Just realize you may incur additional losses at times and they might be severe.
Yes you are totally right on this, that is why I set my price alerts +/- 10 pips away from my SL. Maybe I am overreacting with this stop hunting thing but in any case I find it nice and reliable to get alerted from a third party source when my SL was hit or it is about to be reached.
  • #7
  • Mar 30, 2009 4:11pm Mar 30, 2009 4:11pm
Quoting andrebero
How I understand the stop hunting is that the broker generates an artificial spike to trigger all those SL. So if I don’t place a pending SL order on their platform it will not be executed. At the same time I will not get alerted on the cell phone because this artificial spike will not occur on the alerting price feed. What do you think? Is it a safe way to get protected?
Ah, I see what you are saying; the broker sees close SL orders, and generates 'fake' volume on their end to trigger those orders even though the market may not have actually traded through those levels.

To be completely honest, I don't know if that's what they do. I have read similar before, but it's never been a problem for me. I have seen people argue on both sides though (that brokers do or don't do this), and I do recall reading an article about various brokers and 'evidence' of this SL hunting but it was far from convincing. I do know about how institutional and market making traders go SL hunting, but it's on a more 'legitimate' level (i.e. they actually do trade for those levels, as opposed to artificial trades/volume to trigger individual orders), and in my opinion, that is what you should be more aware of. Read FTI's thread about the technical analysis fallacy for more about this.
  • #8
  • Mar 30, 2009 5:41pm Mar 30, 2009 5:41pm
Quoting andrebero
[font=Arial][size=3]I have figured out a nice way to hide my SL entries from the broker so I can avoid stop hunting. What I do is instead of placing the SL within my order I use a mobile price alerting service to notify me when this price is reached. Then when the price reaches this level I receive a SMS alert on my cell phone and I either call my broker to close the trade or if I am near my computer I close it myself. Personally I do not leave trades open overnight and even if I do sometimes I feel more comfortable to wake up from the alert on...
Sorry bro, but I have to say... No one Broker can HUNT your SL... that is Illegal.. becouse in that case they show you a differennt price...

What is happening here is very clear:

we usualy place our SL above/below some Support/resistance levels.. like Pivots, or last HIgh, lows... The Big Guys [hedge managers. Funds, Banks, institutional traders] sometimes for a fun, but most of the time as a business, they know where someone would be placing a SL>. and they are pushing the price 20 - 30 pips over/below...

NOT a BROKER... noone - bucket broker himself is able to move the price, as they PLAY with limited POOL of money... the top 3 are [fxcm, GAIN and GFT]

So to talk about how BROKER is Hunting you.. is realy funny.. not a brokers,, but big guys.. I remember a days when we wait for london to open, and some of "city" guys are making some fun with the price Up and DOWN..

Hunting the Resistance SL, and then Support SL...

My advice.. focus on PA, and try to place your SL where they are not expected... not on soooo obvious places, like 30pips above DPP or 25 pips below the recent LOW..

cheers..
  • #9
  • Mar 30, 2009 6:01pm Mar 30, 2009 6:01pm
Originally Posted by Darkstar

Buch of bad info in this thread. Let me break it down for you.

Brokers don't hunt "your" stops. Contrary to popular belief, your just not that important. What they hunt are "concentrations" of stops.

Say you have a nice clean up trendline. Technical trader lore says that if that trendline gets pierced, the trend is reversing so you should put your stop just the other side of it. Well guess what. Everyone has their stops in the same place. Stop hunters look for opportunities like this.

Being a broker with deep pockets (actually it's VERY rarely a broker that hunts your stops but whatever) I can move prices around by buying and selling a huge volume. What I'll do is start shorting like a madman, driving price lower. If my pockets are deep enough (or the market is thin enough) I can push the price through the trendline and trigger your stops. Knowing where your stops are I can set my TP at your SL level so in effect your selling me your position which I'm using to cover my shorts. Make sense?

And as an FYI, most retail brokers DO hedge. No, their usually not hedging every order you place in the market, but they are hedging their net exposure. Just because most people lose doesn't mean that the net positions don't pose a massive risk

Living the adventure in my head.
  • #10
  • Mar 30, 2009 6:41pm Mar 30, 2009 6:41pm
Smitten is right 100%, they know the likely area where newbie's will have there stops, real real danger tight to a new low, they know Newbie's will buy a double bottom for instance and they know there stops will be there, which is why when broken it falls real quick, thats 1000's of peoples stops being hit and them taking there losses.

So if your getting SL'd out a lot then it's not your broker it's your trading, take personal responsibility for this learn and move on.

No SL on longer term trades is madness.

SL on short term scalping is also madness, better off manual exit on that.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #11
  • Mar 30, 2009 6:48pm Mar 30, 2009 6:48pm
lol, pitters and leon, i already tried to tell them that. they didn't listen. having the big bad broker hunt your stops is a more convenient idea than the fact that they think like almost everyone else. it's easier to be the victim.
  • #12
  • Mar 30, 2009 7:00pm Mar 30, 2009 7:00pm
Some posts I read, I forget which, implied that you can trade only with buy stops and sell stops, making it easier to fill an order. Am I off my rocker, or is this possible?
  • #13
  • Mar 30, 2009 7:05pm Mar 30, 2009 7:05pm
Quoting ha-pattern
Some posts I read, I forget which, implied that you can trade only with buy stops and sell stops, making it easier to fill an order. Am I off my rocker, or is this possible?

Read this post by merlin and only merlin

http://www.forexfactory.com/showpost...37&postcount=3

Best
mike
  • #14
  • Mar 30, 2009 7:10pm Mar 30, 2009 7:10pm
Something else to add would be that IF a broker was manipulating the price artificially regularly(to hit stops) they would be opening up themselves for huge losses to Arbitrageurs.

From Investopedia(for anyone who doesnt understand what Arbitrage is)...
______
A type of investor who attempts to profit from price inefficiencies in the market by making simultaneous trades that offset each other and capturing risk-free profits. An arbitrageur would, for example, seek out price discrepancies between stocks listed on more than one exchange, and buy the undervalued shares on one exchange while short selling the same number of overvalued shares on another exchange, thus capturing risk-free profits as the prices on the two exchanges converge
______

Substitute Exchange for Broker and Stocks for Difference broker price feeds.

Leon
Living the adventure in my head.
  • #15
  • Mar 30, 2009 7:26pm Mar 30, 2009 7:26pm
WOW!! This guy must be trading GAZZILIONs!!!
Ooooh!!! TEACH me Master!!!












P.S> Sorry.. I know - I tried, but it was just stronger than me...

On the path to Enrichment.
  • #16
  • Mar 30, 2009 10:15pm Mar 30, 2009 10:15pm
Quoting mbqb11
Read this post by merlin and only merlin

http://www.forexfactory.com/showpost...37&postcount=3

Best
mike

Thank you. Yes, that actually clears my mind about it.
In stocks, I was told limit orders are how to go, also; only there, they'll even tell you what time the marketmaker for a particular stock clocks in for work. (And I had less than 1-200 on the stock in mind.) You can capture almost any candle shadow's price in a small, reasonably-price stock, they'll even help you on occasion to cover your shares. Commission base, I guess.
When I got to forex, it was like people were saying requote, stop hunt, best offer, etc., in the biggest market in the world, which is the polar opposite, in a sense, of stocks. So when your quote says the commonality still is 'at market' and 'limit order', the two worlds bind together and the article suggests to me (only) that 'at market' or its derivatives (paraphrasing the quote) are, to me, for commission-based trades and limit orders are for spreads. That gets me in the right direction.
  • #17
  • Last Post: Mar 31, 2009 7:01pm Mar 31, 2009 7:01pm
Quoting ha-pattern
Thank you. Yes, that actually clears my mind about it.
In stocks, I was told limit orders are how to go, also; only there, they'll even tell you what time the marketmaker for a particular stock clocks in for work. (And I had less than 1-200 on the stock in mind.) You can capture almost any candle shadow's price in a small, reasonably-price stock, they'll even help you on occasion to cover your shares. Commission base, I guess.
When I got to forex, it was like people were saying requote, stop hunt, best offer, etc., in the biggest market in the...
Yeah Limit is only so you can buy at the Bid ( join the cue and hope ) and sell at the Ask, the whole you must use Limits is basically a huge way to get Retail people to miss trades, get emotional then normally end up paying more than they'd of paid if they'd just went Market order in the first place.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
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