Forex Mythbusters

I agree with you there Davidee. I can definitely see the market movers making a big enough push to take out a level and then get their momentum built up for the opposite move.

This has to be the truth of the matter, because it makes no logistical sense for a broker with say, 10,000 clients, to try and hunt every trader's individual stop loss.

At least thats the way it would look from where I am sitting.

~fighter

I know this is an old thread, but I have often wondered how true the stop hunting is. I have always traded with a large well known broker so not sure what goes on with the smaller brokers. But I have seen spreads widen and take out my stop, on the other hand I have seen them widen and come within .1 pip of my stop and keep me in. My view on the matter is if they widen the spreads to take out my stops why would spreads widen to .1 pip of my stop and not take it out. I have witnessed stop coming within 1 or 2 pips many times and the trade be a profitable one. If they have the ability to take my stop by widening spreads, why does price come close then not stop me out. I believe that most of the people who say the brokers are constantly stop hunting them are placing there stops in the same places as millions of other traders and the market makers are clearing those areas so they can take the market where they want to go. Just my 2 cents.

I understand this is an old thread but... I think you guys have been discussing two different things:

1) stop hunting techniques in the market is a recurring activity day in day out from the big boys, this ought to be a legit tactic as any other, but it has to be worth it for them as it does in fact get everyone see the same price movements, the problem is that NONE of your mini or micro lot trades ever get to enter the market in the first place. So, this leads to...

2) Market makers as their name implies, make their own "market" handling the enormous pool of orders they get from their retail customers. For small-size accounts this is where the problem is... they make the spreads they want within their own "market" and probably will use whatever shady trick they can to stay within their business's risk limits.

Hopefully the server-side of the mt4 framework software doesn't hold any tricky feature to help brokers do this but it believe in their being creative enought to solve their problem in many different ways outside the box. I had my share of gigantic abnormal spikes out of nowhere... I would compare the spikes with another broker's platform/charts and it would not be there, and so I'd complain, send the proof and have my order back on an hour later, no problem... what happened? ... well, they'll call it a "bad feed" i.e. some "technical glimpse" that was out of their control but wide enough to instantly wipe out all the orders that were hitching their balance limit too much.

I noticed that after moving away from micro accounts (and into "standard lot" accounts) this didn't happen anymore... I might have been lucky, who knows

It's definitely not the case. But regardless, there are much larger predators that are hunting your stops...

Yes.

~75% of the intermarket is controlled by just 10 monstrous and incestuous financial institutions to whom every other market participant is fair game. Their business model being based precisely on hunting clusters of stops/new orders. That's how a market is made. Our retail brokers have accounts with and are preyed upon by these guys. Don't you think then our brokers would do the same to us?

Just having a quick thinking, is it possible the broker just set or alter the pips at each individual since when we use the mt4 are hooked to their panel thru our unique connection. This way they can spike individual A and not affect individual B.
Sorry for pointing out a dumb question. No flame please.

imo, this idea of the "big boys" hunting stops, to the uninformed or novice trader, it just seems to appear that way.....

Commercials("big boys") are the businessmen on the floor--they have business to transact for their companies every day. They have a better understanding of value than any other class of trader.
Using their superior knowledge of value, commercials buffer balanced markets by buying bottoms and selling tops. Balanced markets are the best environment for hedging, the job the commercial ("big boys") does for his firm. As a trend develops, the commercials go with the price change; they do not attempt to "buffer". Often a trend's termination is signalled by the commercials restarting their "buffering".

Capping/"buffering"by commercials ("big boys") fits this scenario:
1. ("big boys") want a balanced market
2. Public/Locals/Retail, etc. drives price out of balance
3. Commercials ("big boys") call the office--cash traders
say nothing is happening in the cash market
4. Commercials ("big boys") wait for public to use up all
their (buying/selling) power
5. Trend stalls
6. Commercials ("big boys") pounce, drive market back to balance......

The key is to not get in the way of these people, they mean business.....imo

Here's one delusion: Why thinking is bad for your trading and my point of view a couple of posts below.
Regarding SL-hunting, you should read last 30 pages of this: http://www.forexfactory.com/showthread.php?t=421191
that's funny stuff till like last 5 pages

i found bertrand's box paradox in wiki, next to monty hall problem
http://en.wikipedia.org/wiki/Bertrand%27s_box_paradox

then something pop in my mind,
if the option are
1. bull & bull
2. bull & bear
3. bear & bear

it seem that holding your win gives you 2/3 chance to win more

*i know plenty will bust this but the paradox is there