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Stop-Hunting Question

  • #1
  • First Post: May 27, 2012 4:39pm May 27, 2012 4:39pm
I always hear people saying how their stops were hunted. I somehow find it very strange that a broker will be interested in stopping out an "individual". If there was a cluster of stops, then its more understandable that prices would go there to stop them out. So my question is, do individual stops get hunted like people claim happened to them all the time? And what if your account is below 100K-200K (is it even worth it to them to stop you out)?

Secondly, if you trade dailies where your stops are minimum 75-80 pips, from my understanding, they wont move the market so many pips to falsely stop 1 person out right?

Thanks
  • #2
  • May 27, 2012 6:38pm May 27, 2012 6:38pm
The answer to your question is yes they can be hunted individually, at least on the MT4 platform. Are they is another question altogether. So it's always better to use a highly regulated and proven br0ker.

And hunting stops is just one of many ways to manipulate your trades. Requotes is a similar problem, especially for scalpers. And then there are the br0kers that delay payments for days or weeks, if they even pay you out at all. Never forget that at the retail level the money you are leveraging isn't yours, it's the br0ker's. And many of them are very sore losers.
To improve is to change. To perfect, is to change often.
  • #3
  • May 27, 2012 6:51pm May 27, 2012 6:51pm
Most of the reputable brokers are going to run their business with some little bit of integrity.

It is very unlikely that a broker would bother their reputation for one lousy retail trade. The thing they will do is cream the masses. The market will always cream the masses. Think clusters of stops.

And trade with a well known, well capitalized broker. Then focus on trading, knowing that the risk of an off-handed stop-out is ever present. Enough people already lose all by themselves, so that the brokers are able to minimize the foul-play or at least try to hide it as best they can.
  • #4
  • May 27, 2012 7:12pm May 27, 2012 7:12pm
Thanks for the reply guys. I think I'm with a reputable broker - Oanda Canada and they are regulated here by the IIROC here
  • #5
  • May 27, 2012 7:14pm May 27, 2012 7:14pm
Quoting pipexplorer1
I always hear people saying how their stops were hunted. I somehow find it very strange that a broker will be interested in stopping out an "individual". If there was a cluster of stops, then its more understandable that prices would go there to stop them out. So my question is, do individual stops get hunted like people claim happened to them all the time? And what if your account is below 100K-200K (is it even worth it to them to stop you out)?

Secondly, if you trade dailies where your stops are minimum 75-80 pips, from my understanding,...
The only brokers that hunt stop clusters of clients are those who utilize a dealing desk, taking the other sides of their clients trades. Those brokers that have direct market access do not trade against clients. Its a common misconception amongst less experienced traders that their brokers are always out to get them by taking out individual stops. There is a simple way avoid any hassle: trade with a reputable broker that has no dealing desk.
  • #6
  • May 27, 2012 7:56pm May 27, 2012 7:56pm
Quoting mfoste1
The only brokers that hunt stop clusters of clients are those who utilize a dealing desk, taking the other sides of their clients trades. Those brokers that have direct market access do not trade against clients. Its a common misconception amongst less experienced traders that their brokers are always out to get them by taking out individual stops. There is a simple way avoid any hassle: trade with a reputable broker that has no dealing desk.
Consider Alpari, a broker that offers both types of accounts (more money required in accounts that do not have dealing desk). You can be sure that Alpari does not have two different bid price streams, just so they can hunt stops on the smaller accounts! That would be nonsense! If any "dealing desk" broker had a bid price stream differing significantly from the market overall, then there might be reason to suspect foul play, but this is highly unlikely. Those big money players in the market that can move prices if they want to (hedge funds, large investment houses/banks, etc.), can and do hunt stops. And no type of account escapes such price moves.
  • #7
  • May 27, 2012 8:27pm May 27, 2012 8:27pm
Quoting pipexplorer1
I always hear people saying how their stops were hunted. I somehow find it very strange that a broker will be interested in stopping out an "individual". If there was a cluster of stops, then its more understandable that prices would go there to stop them out. So my question is, do individual stops get hunted like people claim happened to them all the time? And what if your account is below 100K-200K (is it even worth it to them to stop you out)?

Secondly, if you trade dailies where your stops are minimum 75-80 pips, from my understanding,...

simple answer, no thats bs, maybe back in 2003 brokers would hunt clusters on there book but now you would have to be with one dodgy ass retail broker. The risks are too great for them as they can easily get arbed anytime they did that. They do some other small things but not stopping out individual traders. If they do, that's easily provable anyway.
  • #8
  • May 27, 2012 8:33pm May 27, 2012 8:33pm
Quoting Monroe
simple answer, no thats bs, maybe back in 2003 brokers would hunt clusters on there book but now you would have to be with one dodgy ass retail broker. The risks are too great for them as they can easily get arbed anytime they did that. They do some other small things but not stopping out individual traders. If they do, that's easily provable anyway.
Thanks , makes me feel a lot more comfortable now.

And thanks to everyone else too who answered my question, much appreciated
  • #9
  • May 27, 2012 9:03pm May 27, 2012 9:03pm
Quoting pipexplorer1
...And what if your account is below 100K-200K (is it even worth it to them to stop you out)?...
As indicated by Gain Capital and most likely true for almost all otc fx brokers, the average account size is less than 5k or 10k. If memory serves me right the broker with the biggest accounts averaging about over 40k are Advanced Markets but they have about 50 accounts. If someone has the ability to fund/grow an account to 100k-200k, chances are they wouldn't bother with the crop of popular and well known otc retail brokers.
  • #10
  • May 27, 2012 9:10pm May 27, 2012 9:10pm
Quoting Monroe
simple answer, no thats bs, maybe back in 2003 brokers would hunt clusters on there book but now you would have to be with one dodgy ass retail broker. The risks are too great for them as they can easily get arbed anytime they did that. They do some other small things but not stopping out individual traders. If they do, that's easily provable anyway.
It's one thing to say that they can easily get arbed, but how often does that actually happen? If a certain broker doesn't feel the consequences of stop hunting, why exactly would they quit doing it? Even in Boston Tech's business plan for setting up a new brokerage, they mention that you can clear your clients trades in house as most of your clients would lose anyway and you can just depend on marketing and advertising to replenish the client pool.

And how would one actually prove stop hunting? And I mean proving it beyond doubt of being a crappy trader. Can clients even get access to the price feeds that the broker receives?
  • #11
  • May 27, 2012 9:15pm May 27, 2012 9:15pm
Quoting jeanlouie
It's one thing to say that they can easily get arbed, but how often does that actually happen? If a certain broker doesn't feel the consequences of stop hunting, why exactly would they quit doing it? Even in Boston Tech's business plan for setting up a new brokerage, they mention that you can clear your clients trades in house as most of your clients would lose anyway and you can just depend on marketing and advertising to replenish the client pool.

And how would one actually prove stop hunting? And I mean proving it beyond doubt of being a crappy...
they have other small ways of picking every penny they can but they cant quote off market too far or yes they would get arbed in milliseconds lol.

stop hunt is very real in the FX market and is part of my strategy but its not the brokers stop hunting me or any of there clients personally on there price feed for nickles and dimes.

MT4 is garbage and unless you're swing trading i would avoid it. Simple fix for that issue. Good for charting, but id leave it there.

you can prove it on your price feed compared to reliable price feeds if you think your broker just screwed you. Most of the time you'll find it's just because you pulled the trigger on a shitty trade.
  • #12
  • May 27, 2012 9:28pm May 27, 2012 9:28pm
The one who execute stop hunting tactics is actually other trader (big money traders like hedge fund), not your broker. Your stops provide needed liquidity to the market. Don't blame everything on the broker when you lost money, blame yourself first.
  • #13
  • May 27, 2012 9:37pm May 27, 2012 9:37pm
Quoting Monroe
they have other small ways of picking every penny they can but they cant quote off market too far or yes they would get arbed in milliseconds lol.

stop hunt is very real in the FX market and is part of my strategy but its not the brokers stop hunting me or any of there clients personally on there price feed for nickles and dimes.

MT4 is garbage and unless you're swing trading i would avoid it. Simple fix for that issue. Good for charting, but id leave it there.

you can prove it on your price feed compared to reliable price feeds if you think...
I only use MT4 for charts but out of curiosity, why is it more easier for them to hunt stops if you use MT4 ?
  • #14
  • May 27, 2012 10:01pm May 27, 2012 10:01pm
Quoting traderathome
Those big money players in the market that can move prices if they want to (hedge funds, large investment houses/banks, etc.), can and do hunt stops. And no type of account escapes such price moves.
of course large players search for liquidity, that's what moves the market. What I was referring to was this conspiracy theory that a lot of newer traders have that retail brokers are secretly trying to stop them out every chance a traders puts a stop on a position.
  • #15
  • May 27, 2012 10:15pm May 27, 2012 10:15pm
Quoting pipexplorer1
I only use MT4 for charts but out of curiosity, why is it more easier for them to hunt stops if you use MT4 ?
nowhere did I ever say anything about them hunting stops on mt4, I infact said the opposite, try not to twist words. I think the platform sucks for execution.
  • #16
  • May 27, 2012 10:53pm May 27, 2012 10:53pm
Quoting pipexplorer1
I only use MT4 for charts but out of curiosity, why is it more easier for them to hunt stops if you use MT4 ?
Because the MT4 program was designed for market makers with the ability to fully control the trading parameters, the company that made MT4 offers with it the Virtual Dealer plugin that allows this control. The things they can control are spread markups, requoting, time to fill and slippage for example.

So if the brokers LP price feed is for example at 0.9954, and an individual or cluster stop from sell orders is at say 0.9955, the broker has the ability to wiggle the price by increasing spread see to trigger your stop. They can use whatever excuse they want and validate it with "well we have no control on what the market does do we?", they know that just about every trader isn't profitable, has a negative expectancy, will not take the issue to the regulators, and that the regulators probably won't even take the time on an average account which is under 5k.
  • #17
  • May 27, 2012 11:07pm May 27, 2012 11:07pm
Quoting jeanlouie
Because the MT4 program was designed for market makers with the ability to fully control the trading parameters, the company that made MT4 offers with it the Virtual Dealer plugin that allows this control. The things they can control are spread markups, requoting, time to fill and slippage for example.

So if the brokers LP price feed is for example at 0.9954, and an individual or cluster stop from sell orders is at say 0.9955, the broker has the ability to wiggle the price by increasing spread see to trigger your stop. They can use whatever excuse...

show me one respectable retail broker's price feed that quoted off market to hit stops on their books alone, then show me an interbank feed where it didn't hit that price. If they did, im sure it was a technical issue and they would return the funds. If anything, the interbank price hit higher/lower.

MM models use the spread increase as a means of protection for themselves during news releases etc when conditions call for it. That has to do with the liquidity in the market. Retail brokers are fully net hedged in on the interbank market against there books. They make there money on commissions and the fact that most retail traders have no idea what they are doing.

This is the same recycled sh*t over and over again.

and if large stops are at 9955 and the market is at 9954... the brokers doesn't have to spike it, consider them smoked without the need to do funky shit with mt4.
  • #18
  • May 27, 2012 11:08pm May 27, 2012 11:08pm
Quoting pipexplorer1
I always hear people saying how their stops were hunted. I somehow find it very strange that a broker will be interested in stopping out an "individual". If there was a cluster of stops, then its more understandable that prices would go there to stop them out. So my question is, do individual stops get hunted like people claim happened to them all the time? And what if your account is below 100K-200K (is it even worth it to them to stop you out)?

Secondly, if you trade dailies where your stops are minimum 75-80 pips, from my understanding,...
it's not a real matter - people that gets stop continuously lack either in the trading system or experience.
Hudson Metrics
  • #19
  • May 27, 2012 11:23pm May 27, 2012 11:23pm
Quoting pipexplorer1
Thanks for the reply guys. I think I'm with a reputable broker - Oanda Canada and they are regulated here by the IIROC here
Great news.... You're with a good broker. You don't need to worry about anyone hunting your individual stops.

More Good news.... It's not you against your broker, it's just you and the market. But really, It's just you against yourself.
Good Luck with that one.

But, at least you don't have to worry about anyone jacking your stops.
  • #20
  • May 27, 2012 11:43pm May 27, 2012 11:43pm
Quoting Monroe
show me one respectable retail broker's price feed that quoted off market to hit stops on their books alone, then show me an interbank feed where it didn't hit that price. If they did, im sure it was a technical issue and they would return the funds. If anything, the interbank price hit higher/lower.

MM models use the spread increase as a means of protection for themselves during news releases etc when conditions call for it. That has to do with the liquidity in the market. Retail brokers are fully net hedged in on the interbank market against...
Pfft I'm not going to spend my time doing that...Are you aware that there is no centralized exchange for forex? So there is no set in stone standard price that can be used to compare an individual brokers feed to it's clients. Prices brokers quote with different in house algorithms and LPs are always going to be different.

Spreads don't only fluctuate during news times, if they did then you'd see spreads remain constant during non news time...which never happens.

"They make there money on commissions and the fact that most retail traders have no idea what they are doing." Only ecn/dma brokers make their money off commissions, stps and mms still go off the fluctuating spread markup. And why on earth would (non 'true ecn' brokers) not stop hunt, which is encouraged by taking the other side of trades, it's profitable since they know most traders have negative expectancy and can replenish the pool of new accounts again and again.

"This is the same recycled sh*t over and over again." You got that right. He said - she said. They do - they don't. "We had no control over the price we received...we have no influence on the LP prices...we adjust spreads 'only' in response to LPs...prices vary between brokers and is out of our control...we'll never admit the times we do those things intentionally.

Who the f'''k knows, just trade with positive expectancy.
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