Forex brokers hunt for my stops!!!

Just relax, would you? Now take a deep breath and let’s think: no one in this world needs your stops and your little money. No one will go an extra mile to hire a person or create a software to make specifically Your stops hit.

“…BUT, - you may scream, - JUST TAKE A LOOK AT MY CHARTS!!! The market came and took out my stop and then only turned in my favor leaving me behind with a loss!”… And then you would probably add: “…and that’s not for the first time! I swear, just look at my new charts, screenshots etc.”

Relax. Have you ever tried to figure out why this would happen to you over and over again?
(Whispering….) Shhhh…. They [brokers] spy on you! They know where your stop is and hunt for it!!!
Ha-ha, did you believe that? Yeah, you did.

While the truth is: you place your stops where they shouldn’t be placed. You choose the areas of support-resistance “Firing Line”, don’t you know that the price may fire out at those levels?
The whole world of traders place their entry and exit orders in the closes proximity of those fire lines making them and accumulating fire balls ready to blast is either direction.

One more time for you, in simple words. When price gets to the “Danger. Stay out - fire zone”, many orders are waiting there to be triggered. Half of them, like yours, to close/exit, the other half - to enter a trade. Should the price only sli-i-i-ightly wink to those who are ready to get in, they enter, the momentum is picked up by others and you see a spike against you. Oh yes, your position at that time gets closed, and the same thing happen to many other traders like you.

In a few minutes, seconds, everything is over; an accumulated fire ball has burst releasing its power. A price move pauses and now everyone got time to think… Aha, the spike move was a false one, let’s resume our previous trading direction.

What a miserable misfortune for those who were stopped out! Right?
If you still believe broker hunt for your stops, let me tell you that I also, from time to time, come out of my Dark Kingdom and steer the price towards hitting your stop!

** Forex Dark Lord **

P.S. the world is not perfect. From time to time we encounter unfair Forex brokers on our trading horizon. But those brokers get penalized very soon. If you want to have just a bit of additional confidence in your broker, check if they are registered NFA members.

If you happen to trade during the news, keep in mind that news create serious spikes and many stops are taken out during those times. Also it doesn’t hurt to know that Forex brokers use news announcement times to their own advantage. Remember, your broker isn’t stupid, he knows (and, by the way, warns you) that during news times the volatility can increase dramatically; what a broker doesn’t tell you if that they are using those precious news minutes to add up to the volatility on the price charts and in this way try to take out most vulnerable/closest stops of naive Forex traders.

9 Comments to this post

  1. Good post!
    There could be unfair brokers, although I don’t know any to name. If you want to avoid being “hunted” do not trade during unpredictable market hours - news time.

    All brokers know that during news releases price spins out of control. They may use that time to artificially increase volatility a bit for their users and shake off some additional orders…

  2. Dear Mike, you’ve just missed the whole point of this post :-)

    Here is the long story short: Nobody hits your stops! there is no conspiracy! It is you who miscalculated the stop place.

    you might need to read it again….

  3. Mike’s got a good point though; for anyone dumb enough to start out in Forex with no experience trading anything whatsoever. Hah!

  4. You have to calculate your own risk. Stops should be place about 10 - 15 pips outside the firing zone. That’s my strategy. Slippage and widening of spreads is a money technique for brokers. Never risk more thank 1% of your account. If the stop is too far away, don’t enter the trade.

    Sorry if it sounds like I’m giving advice!

  5. If everybody shifts their stops slightly below trigger (for uptrend) or slightly above trigger (for downtrend) then wouldn’t consensus shift the firing line to those points?? It seems a self-fulfilling prophecy.

  6. I’ve heard the stop hunt stories before. Long story short if you trade with small stops in moving markets big money will kill you stop everytime. And if you have some sort of charting besides what the brokers give you will have an idea that its not the market it’s your trading method. Stops should be dynamic and based on what the market is doing otherwise you will get stopped out for a bunch of small loses

  7. 100% true. Stops must be dynamic. One of the best ways to determine your next stop, besides support/resistance levels, is by analysing market volatility. ATR indicator is one of the favorite tools among traders for setting market sensitive stops.

  8. All of ur posts are simply great.

  9. Questions to ask. Does Firing Line mean the support and resistance line. Like the Fib lines, Moving Averages and the triple zeros?

    Or does firing line means 10-15pip away from that exact figures?

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