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Stop Hunting

  • #181
  • May 28, 2006 6:59pm May 28, 2006 6:59pm
Quoting pfredricks
Hello all!
I am so thankful that i found this forum.
I began trading the forex about two months ago. I was highly successful on my demo account. Then, i went live. Whew, what a difference. I thought that i must be going crazy because i made about twenty trades and they all deflected away from where i predicted. Then i got stopped out twice within 1 pip on two different occasions-and i had puposefully set my stops very wide. It was amazing. The candlesticks marched right down to my stop then shot right back up in ways which did not occur on other brokers charts. It was so blatant that i started researching and ended up here. I just want to reaffirm what you are reporting with stop hunting and manipulation. It is awful. I am pretty much convinced that scalping cannot work in this environment and trading with stops is a death sentence. It's sort of like playing poker and showing everyone at the table your hand, but you cant see theirs.

Now, i am curious about ways to fight it.
For example- could we
Put in a larger limit buy order 1 pip above the stop? So the MM would actually risk loosing more by hunting/triggering the stop
Going long with no stops at all
What is the solution for those of you who know what i am talking about exists? With good analysis it would seem like a pretty good way to go.
The data cannot be manipulated as much in the long term game
I think it's important to distinguish between the ebb and flow of the market and actual stop hunts that occur. I think I provided a clear case of stop hunting. A single trader was targeted and the price was significantly away from where a consensus market price showed to be. When I was first trading, I thought I saw stop hunting more frequently then was actually occurring. Eventually, through observation, I've learned how to manage the ebb and flow of the markets. So, my advice is to develop a system or use a system that takes this ebb and flow into account.

On another note, I use an expert in MetaTrader to handle my stops. That way, I don't need to add the stop to an order where everyone can see it, but, I run the risk of getting into a bad situation if my computer crashes. There is always a trade off with whatever you choose to do to get around the stoploss issue.
  • #182
  • May 28, 2006 8:48pm May 28, 2006 8:48pm
Just came off a chat with FXCM - as i am a client of theirs.

I asked them some of the hard questions, that people have been trivalising in here...

After a few questions into my chat with them, around the time i started asking about stop hunting and how their feeds work .... they disabled their conversation with me.

Im not sure if it was a technical error, but i havent had an issue talking to them in the past, and this certainly has left me a little suspicious.

Anyways - The answers i did get out of FXCM is that, their platform - which is not java based by the way - the feed fed through to the system, is seen by everyone, and no one can have their feeds manipulated.

Also - if FXCM did manipulate a feed on price, then traders can arbitrage the difference between their feed, and the real market price (which i often do! - successfully). FXCM does this, cause it creates a market amongst its clients, and the excess of longs or shorts - since their clients cant be 50% long and 50% short, is traded amongst the interbank market.

My advise is.....take advantage of the arbitrage opportunities available with retail marketmaking brokers, between their feed and the real market feed.

And stay away from keeping stops on your account, if your worried about the manipulation of your private feed.

I never keep stops on my account -perhaps a reason why i havent run into these problems previously.

I have been a customer of FXCM for 3 years - although the findings are disturbing....i often take advantage of the benefits being with a marketmaker - especially the arbitrage opportunities during news - when the broker might freeze the feed or price doesnt come through on FXCM's side fast enough, and i realise on my 3rd party feed that the price has moved 5-10 pips away from the price being displayed by FXCM.

cheers

rusty
  • #183
  • May 28, 2006 9:35pm May 28, 2006 9:35pm
this may be too farfetched but, what about the brotherhood of the press?

say somebody hinted that US$1.5 trillion (or billion?) worth business may but a scam. won't anybody in the press be at least interested and may pursue it further. i mean, like Intel Pentium's floating-point bug, if you guys remember. just a simple problem that would occur in like 1:1,000,000 but the press made it so that it change Intel forever.

maybe if we can tickle the press to investigate this matter, it will blow up sufficiently so those G-men on top might forced to do something.

remember, no one accusing anybody anything. but a possibility of US$1.5 trillion (or billion?) worth scam, not to mention nationally if not internationally?
  • #184
  • May 29, 2006 12:02am May 29, 2006 12:02am
Quoting Zen
this may be too farfetched but, what about the brotherhood of the press?

say somebody hinted that US$1.5 trillion (or billion?) worth business may but a scam. won't anybody in the press be at least interested and may pursue it further. i mean, like Intel Pentium's floating-point bug, if you guys remember. just a simple problem that would occur in like 1:1,000,000 but the press made it so that it change Intel forever.

maybe if we can tickle the press to investigate this matter, it will blow up sufficiently so those G-men on top might forced to do something.

remember, no one accusing anybody anything. but a possibility of US$1.5 trillion (or billion?) worth scam, not to mention nationally if not internationally?
This is a little far-fetched. The intel problem affected 85% of the desktop computer market.

While the forex is 1.5 trilllion daily, what percentage of that do you honestly think is retail forex? trust me, it's small percentage, which makes it a MINISCULE percentage of actual investors out there in the world. The press won't exactly be hoping at the chance.

Honestly, outside the casual mention, even the HUGE story of RefcoFX going under, it's hardly a concern for the average investor since the average investor considers forex to be highly risky anyways.

Look, the advice is simple...

1) don't use broker-hosted stops unless you absolutely have to...and if you have to, don't be surprised that it gets hit to the pip.

2) even your internal stops should probably lie comfortably outside clusters of common support/resistance (like fibs, pivots, highs and lows, etc).

3) Keep your position sizes comfortable...in other words, you need to ensure that your trade won't cause restlessness in the event it moves against you in small moves.

4) If you feel cheated by your broker, trade somewhere else. ECN and ECN models offer your biggest hope of avoiding these issues...

5) don't trust anyone in the business...not your broker...not your bank...not your signal provider...no one. Rely on yourself and your good money management.

6) If you can't abide by the first 5 rules...don't trade forex.
  • #185
  • May 29, 2006 2:11am May 29, 2006 2:11am
Thank you so very much for all of the feedback.
It is so helpful to have so many like minded individuals thinking about this stuff.

yes, it is true, i lost a pretty good amount on this forex thing. I didn't lose anything that i couldnt afford to and i won't lose any sleep. But, it is still enough. The weird thing is that i dont even really mind the money so much. I should have learned the ground rules better. I have to actually marvel at the clever way this occurs. To make a long story short- Except for the unbelievable stops being triggered down to the very pip ( and again I set them out in no man's land on very odd numbers-not succumbing to the round number thing) My analysis was essentially perfect. SO, in a strange way, i am actually encouraged because i understand the rules of the game better. It is truly a costly learning process, but, perhaps still viable under certain market conditions.

This forum is the first place that i ever heard anyone say not to use stops, i thought that i must be alone on this viewpoint, but i am glad to see that i am not. After i really thought about it....it is usually the trading platforms and their representatives pushing the use of stops. I should have seen it coming. Shame on me. I know better now.

It is clear to me that you folks know what the heck you are talking about and you understand the rules of the game better than most.
I guess i will proceed with this understanding. I think MRMIKAL summed it up very well.

"A nod's as good as a wink to a blind man."
  • #186
  • May 29, 2006 11:54am May 29, 2006 11:54am
mrmikal, plus anybody else, what about OandA?

I'm planning to trade live with them and my situation force me to set entry and exit points around NY open (24/7 Internet access is way over my paycheck).
  • #187
  • May 29, 2006 3:29pm May 29, 2006 3:29pm
Hey Stockwet, what is ebb and flow of the markets?
  • #188
  • May 29, 2006 3:34pm May 29, 2006 3:34pm
I am sorry ShaderZ, but I had to delete that post with the very large image. It causes a malfunction for the screen display.

If you can shrink it down or put it in a zip I think it will work.

Scott
Quoting ShaderZ
Hey Stockwet, what is ebb and flow of the markets?
  • #189
  • May 29, 2006 4:45pm May 29, 2006 4:45pm
http://img222.imageshack.us/img222/8...cm023dv.th.jpg

No Problem
  • #190
  • May 30, 2006 12:49am May 30, 2006 12:49am
Again, great feedback from everyone that responded!
I appreciate everyone's insight and opinion. Everyone was very helpful.
I was just saying that MrMikal's statements basically summed up what i was thinking for the successful trading mindset.
Believe me, i want to be a good member of this community, so again, i thank each and every one of ya.

That screenshot is so FUNNY! Just soooo not surprising. Awesome that you captured it and even better to share it!

As a case study-back on the horse and trading went better this weekend-
So, i traded today and was able to pick up about 90 PIPs by letting things ride over the weekend. Got out at the perfect time by manually selling. I didnt even want to tell the broker when i was planning on selling. Geesh how weird is that?
Oh what a difference some fresh perspective was and I was able to view market off and on.
I had two screens up at once and was watching the two quotes together. The biggest variance between the two quotes i saw was about 10 PIPS. That was a pretty interesting thing. There was also a time when the spread on the other quote site was 10PIPS between bid/ask. So that was something i had not seen from my broker and the usual 3 PIP. There were times that my broker was closer to the bid than the ask of the other-presumably to deflect down if i had bought to "scare" me into selling. I also became much more aware of the blinking candlestick effect of making big jumps down but the bid/ask wasnt changing and the other site was rock steady and not moving-Curious, eh? I aint falling for it anymore! It is like Vegas in a way. Honestly, i was able to get out and basically sell at the perfect PIP by watching the dropoff of the other broker. I could almost feel the stops being hit and holding. AMAZING!
Anyway, I was able to wait until some low volume get in, ride it, get out...no funny business.....no stops, no limits, etc. I had to just be emotionless and let the plan work and get out at my predetermined level. i wonder how cool i can be though as the denomination level increases. i WOnder if someone got really great at trading if the broker would ban them like a great gambler.
I bet so. (punny, yes)

Beautiful first very successful trade. I owe it all to you guys! Thanks for the encouragement and reinforcement of these ideas.

Now about that stop hunting....it seems like everyone does it....that is sort of the way of the market. That kinda seems like the point...finding the stops and either moving through or passing...on a market basis.....however i still find the broker "stop hunting" idea very disconcerting.
  • #191
  • May 30, 2006 12:55am May 30, 2006 12:55am
ZEN
I do wonder how successful one could be at trading FOREX without being able to accept some pretty heavy losses. I think that is part of it, too. Letting the trade develop. If money is tight...and we get fidgety with the trigger finger it will be very difficult to let things develop.

If 24/7 internet is out of the budget.....it just made me think.

I dont want to discourage you.....i can just tell you from experience that the losses can be swift and large. Good luck either way!
  • #192
  • May 30, 2006 6:29am May 30, 2006 6:29am
ShaderZ,

Hmmm, So you watch Forex TV and listen to winamp radio.... gotcha
  • #193
  • May 30, 2006 6:52am May 30, 2006 6:52am
I would like to step in this thread and provide information on my broker:

CBFX or IFX Markets USA. I opened an account with them last November. I am very satisfied with their customer service and I have never been victim of stop hunting.

What we must not confuse here are brokers running clients stops purposedly and IBs running stops to their advantage.

I saw many fake-spike pics over the net that <deleted word> many traders out of money.

However, something I noticed is that those spikes usually come in moments before or during news announcements.

I use Tradestation as my main data feed and ONLY USE MY BROKER TO PLACE ORDERS.

I trust tradestation. I built my system there, so I trade off prices fed by tradestation. I dont give a damn about what prices my broker is running.

I entry at market and exit at market. Of course, I place a HARD STOP 50+ pips away from my entry point just in case of a terrorist attack or a war blowing out somewhere around the world.

I never enter a trade within 30 mins prior to news announcements and wait at least 15-20 mins after the news before taking a position.

Sometimes I wonder how someone could be making money with news when you have those huge 30-40 pip gaps within seconds after the news has been announced.

My idea is that market operators know about the news LONG BEFORE the news announcements. Sometimes the news is already discounted in prices, and MMs only wait for the news to make a public killing.

Only way i trade the news is if i am in before the news, at that point i just cross my fingers and pray.

I personally dont like the news, i feel like its more gambling than trading.
  • #194
  • May 30, 2006 12:45pm May 30, 2006 12:45pm
Quoting lavista4u
ShaderZ,

Hmmm, So you watch Forex TV and listen to winamp radio.... gotcha

I USED TO watch Forex TV.... Seems to me like they discontinued their daily video feeds a while back. But yea, :
  • #195
  • May 31, 2006 3:59pm May 31, 2006 3:59pm
One thing ive noticed about this forum ( and really like about it ) is that its not censored as heavily as some of the other ones ive been to. It seems that if anyone has a beef with any particular broker, the admins and mods wont be quick to erase that persons posts and or disable that person from posting, so long as their beef seems legitimate. And also, i see alot less "spam" posts on this forum like people trying to sell stuff which is really annoying. Keep up the great work guys
  • #196
  • Jun 1, 2006 10:34pm Jun 1, 2006 10:34pm
Read this thread below:
http://www2.oanda.com/cgi-bin/msgboa...=005195#000009
  • #197
  • Jul 3, 2006 10:27am Jul 3, 2006 10:27am
All of you who knows something about stop hunting by the market makers please share.
I specialy apply this to all of the experienced traders here.

Thanks.
  • #198
  • Jul 3, 2006 11:36am Jul 3, 2006 11:36am
Ups,sorry for posting another thread,i didn't see that one.

Thanks MR.Smjones
  • #199
  • Edited Jul 4, 2006 8:00am Jul 3, 2006 12:15pm | Edited Jul 4, 2006 8:00am
Hey HC, It is always worth talking about again and some more. I like stop hunting. I have it figured into the way I trade. It actaully triggers my trades...
If you can't beat em join em...

Scott

Update: I have merged the two threads, because someone else has added new postings.

Quoting happy camper
Ups,sorry for posting another thread,i didn't see that one.

Thanks MR.Smjones
  • #200
  • Jul 4, 2006 3:47am Jul 4, 2006 3:47am
Quoting smjones
Hey HC, It is always worth talking about again and some more. I like stop hunting. I have it figured into the way I trade. It actaully triggers my trades...
If you can't beat em join em...

Scott
I have been trading for a year now and this is the firs time I heard about this. Yesterday I read the whole 14 pages + some links and I must say I was shocked. After realizing the reality I knew I had to change some things about my trading because those things happend to me in the past with my broker but I could not explain them because I didn't know they even exist.

And you said it the best - If you can't beat em join em...

Please correct me if I am wrong,but it seems to me all you need is a third party live quotes providor.I think i already figured it out how to make stop hunt into your advantage.
I don't know if this is an appropriate question,but I'll shot away anyway
Do I have to have real time bank quotes or is it enough to have anothers broker demo?

Or am I way of with this thing?

Thanks
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