Has anybody experienced stops being hit more frequently? | Forex Factory

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Has anybody experienced stops being hit more frequently?

  • #1
  • First Post: Oct 11, 2010 8:51pm Oct 11, 2010 8:51pm
I've been trading profitably for awhile now and built a fairly small account $1000 starting balance, to a pretty decent size. Recently I've been having a much more difficult time trading. My system relies on tight stops and high leverage. My stops seem to be getting hit much more frequently as of late. I always thought I would be the last person on this forum to blame anything on my broker and I'm still not saying my broker is the problem. Just wondering if anybody who has built up a smaller account has encountered some issues as their account grows. I'm thinking perhaps the amounts I was trading weren't significant enough to justify my broker hedging my position and maybe I've crossed a certain threshold where now they are hedging all of my positions causing more stops to get hit. Maybe I'm just paranoid but things just seem to have a different feel if that makes any sense. This is the only reason I ask. Thanks in advance.
  • #2
  • Oct 11, 2010 9:57pm Oct 11, 2010 9:57pm
If you think your broker's intentionally running stops against you, compare your charts to free online charts, like either here at FF or at dailyfx dot com. If your charts differ by more than a few pips, then you might be on to something.

To be technical, your broker isn't 'hedging' against you, he's taking the other side of your trade. This isn't a bad thing because if you want to buy you need someone to sell to you, and vice versa. If your broker didn't do this, you couldn't take a position.

It's possible and likely that some/many participants in the broader market are running stops and you're getting picked-off along with hundreds of others, but it's very unlikely you're the specific target.

Rob
  • #3
  • Oct 11, 2010 10:11pm Oct 11, 2010 10:11pm
Do you know the exact win rate of your system? Some systems have a very low win rate and sometimes is normal to get 20 loses in a row.
  • #4
  • Oct 11, 2010 10:34pm Oct 11, 2010 10:34pm
I doubt the brokers have that much interest in you, but it is possible for them to configure the chart itself against you on a lower time frame. In other words they can show only you an indvidual chart. Don't believe that? Take a look at the customer agreement. Some of them reserve the right in black and white, and the cftc is worried about margin Have you considered the volatility of late? Maybe your stop is set too close. Take a look at the ATR, or just eyeball the size of the bars on the time frame you trade. Be sure to figure in spread widening. That just might be the problem.

[QUOTE Just wondering if anybody who has built up a smaller account has encountered some issues as their account grows. I'm thinking perhaps the amounts I was trading weren't significant enough to justify my broker hedging my position and maybe I've crossed a certain threshold where now they are hedging all of my positions causing more stops to get hit. Maybe I'm just paranoid but things just seem to have a different feel if that makes any sense. This is the only reason I ask. Thanks in advance.[/quote]
  • #5
  • Oct 11, 2010 10:41pm Oct 11, 2010 10:41pm
When I hear "tight stops" I tend to assume you are scalping on low (lowest?) tf as I like to do. If you are trading with a bucket shop you have to know that you are at the bucket's mercy to some extent, if you scalp. Fx is an otc market and there is not one "price" - but there needs to be a fairly close coordination of the rolling interbank price so that any imbalance may not be arb'ed. So the bucketshop is "manufacturing" the price within given constraints. Still, on very low tf the bucket has an opportunity to oscillate the buy/sell balance or to even run stops within those constraints. To "not" do this would be analogous to you "not" pausing briefly to pick up random $100 bills that happen to lie in your path, everywhere you go, every minute of the day. But, also, if the bucket didn't protect himself in this way it would simply be too easy to enter no-risk 100-lot trades for 1 pip winners all day.

In other words, the tighter your stops, the more you are relying on luck - luck that your broker's stop vacuum will miss your stop.

There is something of a workaround, however. You can observe what type of range of oscillation is present in the PA at any time by looking at the 5s or 10s tf. This will allow you to assess how small of a stop you may get away with for the initiation of the trade and then for moving the sl to be....
"If The Fool persists in his Folly he will become wise." - William Blake
  • #6
  • Oct 11, 2010 10:58pm Oct 11, 2010 10:58pm
Quoting The Fool
There is something of a workaround, however. You can observe what type of range of oscillation is present in the PA at any time by looking at the 5s or 10s tf. This will allow you to assess how small of a stop you may get away with for the initiation of the trade and then for moving the sl to be....
just an example, market currently not tradeable, but these oscillations are often there. Are they "natural" or contrived?
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"If The Fool persists in his Folly he will become wise." - William Blake
  • #7
  • Oct 11, 2010 11:15pm Oct 11, 2010 11:15pm
Thanks for the responses. I appreciate you guys taking the time to help me out. I'm aware of how most of these retail brokers operate that execute trades in house. I'm considering switching to an ECN (have my eye on interactive brokers) in an effort to avoid some of these issues. I was just asking because when I was trading mini's I never seemed to run into any problems with stop hunts. Now that I'm up to standard lots it just kind of feels like I'm being hunted from time to time. I've been comparing my brokers feed to the one here at FF and it never fluctuates more than a few pips but a few pips is all it takes to stop me out. I'm placing real tight stops at strong support/resistance levels where I have a nice confluence of several indicators. Price just seems to sneak up and bite me in the ass real quick and then turn back around respecting the level but still taking me out. With my current strategy I can't really afford to use larger stops unless I scale back my leverage. The strategy was working fantastic until I started trading larger lots which is why I was asking. Could just be a coincidence but that seems unlikely.

Edit: and yeah, trading off of the 5m chart only holding trades for a few min. Maybe I should try out those really short time frame charts you posted. I don't like trading off of them but might not be a bad idea to see whats going on. On the m5 a lot of the time it looks like price isn't near my stop when I get taken out.
  • #8
  • Oct 11, 2010 11:24pm Oct 11, 2010 11:24pm
Quoting Awesome
Could just be a coincidence but that seems unlikely.
try entering small opposite the direction you'd like to trade and then entering larger in "true" direction upon stop-out

or perhaps use mental stops

hard to beat the house though, amigo, and that's just the plain truth
"If The Fool persists in his Folly he will become wise." - William Blake
  • #9
  • Oct 11, 2010 11:31pm Oct 11, 2010 11:31pm
Quoting The Fool
try entering small opposite the direction you'd like to trade and then entering larger in "true" direction upon stop-out

or perhaps use mental stops

hard to beat the house though, amigo, and that's just the plain truth

Ha ha, I like the way you think. Beat them at their own game. But yeah, I see what you mean. If you tell me the rules of the game I'll find a way to win. It gets difficult when you don't know the rules though.
  • #10
  • Oct 12, 2010 1:20am Oct 12, 2010 1:20am
Quoting Awesome
Ha ha, I like the way you think. Beat them at their own game. But yeah, I see what you mean. If you tell me the rules of the game I'll find a way to win. It gets difficult when you don't know the rules though.
The smaller the timeframe, the larger the unnatural oscillations become. As someone else pointed out, the broker has to protect itself from 'pick pocketers'. Ever notice how price halts near your take profit? One way to beat this is by setting your TP higher and manually closing before TP reached or setting no TP altogether (altough broker always knows what direction is profit for you). It becomes increasingly difficult for brokers to manipulate price/feed the larger the timeframe. Of course the life of the trade is longer bringing swaps and interest into play.

You probably know the rules better than you think. It's you versus the broker AND the market in a numbers game. You can't over play your positions. You have to be able to weather the storms. If you can do this you can expect a decent profit with time (from a % standpoint). Forex can be profitable and fun despite what people say. At least I find the challenge fun. Forex is the most challenging thing I've ever encountered.

My advice to beginners or struggling intermediates is lower your risk of loss (higher tf, smaller position size, greater SL & TP range, etc).
  • #11
  • Oct 12, 2010 6:14am Oct 12, 2010 6:14am
Quoting 2+2=4ex
The smaller the timeframe, the larger the unnatural oscillations become....

Thanks for the info. It's interesting that you mention that about the take profits because I have noticed my take profits always take a few seconds to execute where as my stops are usually taken out the millisecond price comes near them, often times the platform will seem to round to my stop even though price doesn't actually hit it (example: stoploss at .3830 and gets executed when high is at .38298). I do notice that whenever I feel something fishy is up it's always very subtle. Price never seems to vary more than a pip or two tops compared to other brokers, but it still gets incredibly annoying. I suppose I can remedy this with wider stops. Seems like my broker didn't start playing these games on me until I was consistently profitable and started trading larger lots though. I'm starting to worry that perhaps your broker will do more and more to take you out the more money you make with them. As I mentioned before, when I was profitable with a smaller account I didn't seem to notice anything fishy going on, but now as my account has grown larger it seems to be getting progressively more difficult.
  • #12
  • Oct 12, 2010 7:27am Oct 12, 2010 7:27am
Quoting Awesome
Thanks for the info. It's interesting that you mention that about the take profits because I have noticed my take profits always take a few seconds to execute where as my stops are usually taken out the millisecond price comes near them, often times the platform will seem to round to my stop even though price doesn't actually hit it (example: stoploss at .3830 and gets executed when high is at .38298).
Let me see. You sold. Your stoploss is 0.3830. The price goes against you and reaches 0.38298. The broker closes your position. How rude, isn't it?

Actually this is how the market works. Your stop means that you're willing to buy at 0.3830. If somebody is willing to sell to you at a price which is bigger or equal to 0.3830 than you must buy, according to your order.

0.38298 is the Bid price and Metatrader shows the Bid as the current price. But the Ask is Bid + Spread so the Ask was bigger than 0.3830.

Your broker is probably a market maker and a bucket shop so he is trading against you, you don't actually buy or sell, your orders are only between you and him.
  • #13
  • Oct 12, 2010 7:43am Oct 12, 2010 7:43am
How about using market orders or stop limit orders to exit your trades? Does your system allow this? If you decide to use a market order, then place a hard stop 2-3 times away from where you normally exit as an emergency stop loss in case you lose internet/power/etc.
  • #14
  • Oct 13, 2010 8:09pm Oct 13, 2010 8:09pm
Thanks again for the info. Yeah, I'm kind of forced into using larger stops now. Worked alright for me the other day, just a bit more painful when they are hit. I just thought it was odd that the frequency in which my stops where hit increased so drastically. It made me think I suddenly popped up on my brokers radar or something.
  • #15
  • Oct 13, 2010 8:22pm Oct 13, 2010 8:22pm
Have you tried something like this?
Attached File(s)
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We are all One. Be present. Be the Observer
  • #16
  • Oct 13, 2010 8:33pm Oct 13, 2010 8:33pm
Forex is always changing, we are constantly being told this. Your system (and my system for that matter) can't win on every trade we take. And it's going to be the same for your stoplosses as well. From my experience (and granted it is not all that long) my trading success can even be influenced by the time of year (people on holidays, certain holidays themselves etc.).

Not every trade will go according to plan. I've often take trades with the expectation of seeing them successfully making me some profit only to see them initially head in the wrong direction and you only have a certain amount of space until your stops are hit.

I remember early last year, I entered a trade thinking that it looked as perfect as it could be only to see things quicly go sour. I saw on my news report thread about an hour later that some name had dumped a large amount of money into my pair forcing it to go the other way to what I had expected.
  • #17
  • Oct 13, 2010 8:58pm Oct 13, 2010 8:58pm
Quoting Iamfx
Have you tried something like this?

That's for metatrader correct? Unfortunately my broker doesn't offer metatrader so I'm forced to use their java based trading platform. It isn't possible to configure MT4 for use on Oanda API is it?
In response to betting, I agree with you. Markets are always changing so your trading system has to have some dynamic elements to it. I may just be paranoid. Even if they are manipulating price it's never by more than a pip or two. I've actually been pretty happy with them for the most part. Just seemed like things changed pretty quickly so I was wondering if anybody else experienced anything similar.
  • #18
  • Oct 13, 2010 9:15pm Oct 13, 2010 9:15pm
Quoting Awesome
That's for metatrader correct?...
Yeah sorry MT4. You could try starting a thread on Platform Tech and somebody may help.
We are all One. Be present. Be the Observer
  • #19
  • Oct 13, 2010 9:31pm Oct 13, 2010 9:31pm
The ckskers can't hit my stops cuz I just use mental ones. I always have an out of range stop placed when the trade starts but will move it in to get stopped when I hit a loss limit.

No, what they do to me is more heavy handed than stop hunting: they just glitch up the platform to the extent that it becomes hard to trade.

You can't win I tells ya.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #20
  • Oct 13, 2010 9:49pm Oct 13, 2010 9:49pm
Quoting The Fool
The ckskers can't hit my stops cuz I just use mental ones. I always have an out of range stop placed when the trade starts but will move it in to get stopped when I hit a loss limit.

No, what they do to me is more heavy handed than stop hunting: they just glitch up the platform to the extent that it becomes hard to trade.

You can't win I tells ya.
Ha ha, so if you're not an idiot and lose all your money on your own, the brokers have to take matters into their own hands?
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