Let's give "stop hunting" a rest

[autofx]

I've seen a lot of posts lately about how online brokers are hunting everyone's
stops.

Look, for every stop of mine where I even slightly suspected I was being
victimized, there have been dozens if not hundreds where the market came
within a few pips of my stop, but didn't hit it. Why didn't my online broker
take those opportunities to take out my stops by fudging the rates by a
couple of pips?

When we see complaints about people's stops being "hunted", I think we are
typically reading examples of people using tight stops and being quite
flabbergasted that they actually lost some money. Or they were stunned to
have three or four stops taken out in a row.

This is trading, folks! If you can't take the heat, get out of the fire!

[zupcon]

In principle I mostly agree with Bobs sentiments, but.......

in such an unregulated market Id be amazed if brokers didn't manipulate rates to some extent and manipulate them in their favour, however it cuts both ways, you win some, you loose some, you just have to accept it, live it it, and move on.

You ask: “Why didn't my online broker take those opportunities to take out my stops by fudging the rates by a couple of pips?”

Of course you have to remember that your stop loss is someone else's profit target and I assume fudging the rates by a couple of pips to destroy your trade may not be ultimately in their best interests if they if this means a larger payout to others.

I do however wholeheartedly agree about the use of excessively tight stops. I'm a more of a scalper, and I don like taking more than a 15 pip loss on any trade. Trades are either right from the word go or they're not and I cut my losses. However I soon came to realise that setting such a tight hard stop often leads to being stopped simply through the odd spike, so in reality I now set a 30-50 pip hard stop just to cover emergencies, and use a 15 pip mental stop loss which seams to be working out far better.

I don't claim to be any kind of an expert in this matter, but I do use 2 different data feeds, one for charting and one for order execution, and the differences are sometimes quite significant, particularly with respect to spikes

One thing I have learned in my very limited experience is that there's only one person responsible for your gains and losses, and that person certainly isn't your broker !

[rockinride]

I agree with the sentiment that tight stops would be taken out just by natural movement of the market in most cases. But if this is true, why wouldn't tight targets be hit with equal frequency as well? If your calling a direction correctly, why would you not avoid the stop loss and hit the target about equally( minus the spread of course ). This doesn't seem to be the case with most traders.

I guess I just don't understand why it's so unlikely to think that there is a program design to most brokerages that hunts the most profitable direction to fluctuate it's quotes based upon investors postions in the market. Very simple code to write. Certainly within say 100 pips. Which would cover almost all retail trader's stop losses. A trader could easily find his stop was missed by only one pip, if the target for another trader would be acheived resulting in a greater loss for the brokerage.

It is painfully obvious sometimes that brokerages are quoting differences of 30,50,100 you name it from other brokers. I have always traded with not only my brokerage feed, but as many others as possible, as a check and balance to my brokerage. Why is this happening? I am very curious to know how most of the big guys quote their prices on currency. I think this subject really needs to be addressed more often. If I have missed it in another thread I apologize.

If you use say FXCM, REFCO, or any other monster brokerages, you sign away the majority of your rights in regard to price fluctuation, just to set up an account, read the fine print. You can call them on strange happenings, and occasionally they will accomodate you, but for the most part you are expected to trust your brokerage blindly with their data feed. If anyone has inside info on this subject, or more accurate info please bring it to the table.
I don't understand why the retail currency markets/brokerages shouldn't have to subscribe to a single data feed, via a global currency orginization. This would help regulate the potential for fraud. By joining a reputable orginization they would inrease validity of their feeds. As far as I know this doen't exist, if so, I apologize but please clarify.

Again, I don't understand the inside operations of most brokerages, so if anyone can expand on this subject please do. Especially if you have been employed or have inside info.

We put an awful lot of faith into these guys ( based upon the fine print in most of their agreements ) is it too much to ask to eventually work to a more consistent data feed, like other markets seem to offer.

I think that giving the topic "stop hunting" a rest is a bad idea, Or any other skeptical viewpoint to the market. It is not merely people whining about losing as some continue to preach, it is valuable discussion about random trader's similar experiences, in what in many ways is a very secretive market in relation to it's behind the scenes operations. Skepitcism is not negative or cynical viewpoint, it's jut plain smart. Escpecially in relationship to investing one's hard earned cash.

Good Luck to All.

[tim_nn]

Originally Posted by autofx

Look, for every stop of mine where I even slightly suspected I was being victimized, there have been dozens if not hundreds where the market came within a few pips of my stop, but didn't hit it. Why didn't my online broker take those opportunities to take out my stops by fudging the rates by a couple of pips? When we see complaints about people's stops being "hunted", I think we are typically reading examples of people using tight stops and being quite flabbergasted that they actually lost some money. Or they were stunned to have three or four stops taken out in a row.

I completely agree, Bob.

Originally Posted by rockinride

If you use say FXCM, REFCO, or any other monster brokerages, you sign away the majority of your rights in regard to price fluctuation, just to set up an account, read the fine print. You can call them on strange happenings, and occasionally they will accomodate you, but for the most part you are expected to trust your brokerage blindly with their data feed.

You have put your finger squarely on the problem. People will always remain uneasy as long as they don't trust their broker. And they won't trust their broker if they think their broker is holding the other side of the trade. And their broker may be well be holding the other side of their trade because of very poor regulation of the whole Fx industry.

In the UK we are lucky enough to have an answer to almost all of these problems: use a spread-betting firm which is regulated by the FSA (as they all have to be). Your money and your positions are safer, and every trade made by every client is inspected by a fire-breathing dragon of a regulator with real teeth, of whom all the spread-betting firms live in fear.

It's not the reality that's the problem; it's the perception. Bob is undoubtedly correct. But rockinride will perceive it how he wants to perceive it anyway.

Originally Posted by rockinride

I don't understand why the retail currency markets/brokerages shouldn't have to subscribe to a single data feed, via a global currency orginization.

You don't? Well, ten seconds' thought suggested 4 or 5 pretty overwhelming reasons to me, but you and I have perhaps argued too much already in other threads, so I'm going to bow out of the conversation here and leave others to take it up.

Personally, when I see people whingeing about stop-hunting, I have to be careful not to succumb to the urge to seize them by the scruff of the neck and ask "Just who the hell do you think you are, you one-lot piker?!"

[carson]

Stop hunting by individual brokers is almost impossible if you think about it for a few minutes. If a broker's prices are out of line with other brokers by more than 5-10 pips then you have a virtually risk free arbitrage opportunity. I have accounts with 4 brokers, and I have NEVER seen prices differ by more than the spread except immediately after news announcements when even if the prices do differ you can't trade them anyway. If you're crazy enough to trade at these times then you have to accept the risks.

This isn't to say stop hunting doesn't go on - it does, but is carried out by very big fish that move the entire market to where the stops are.

[autofx]

I guess others are seeing things I just don't see -- we each see the markets
through a personal lens. As I've said before: in over a thousand trades with
FXCM, I only believed my stop was hunted ONCE, and when I confronted
them, they acknowledged the "bad tick on their part" and put the dollar
amount of the stop back into my account within an hour.

The vast majority of times I have stops taken out, I'm glad the stop is
there to prevent further loss as the trades go against me. Naturally, there
are times when the stop is just barely hit only to have the market go back
in favor of my now liquidated-for-a-loss position. But I check other data
sources and see that the rest of the market went along for the same ride.
This is par for the course in trading. So I've stopped worrrying about it.

I don't think this is "preaching" at all. It's just me stating I what I've seen
with my own eyes.

I'll stick to my opinion that the losers who blame their losses on stop-hunting
are whiners. Do you guys blame McDonald's for being fat, too?

[autofx]

Originally Posted by carson

This isn't to say stop hunting doesn't go on - it does, but is carried out by very big fish that move the entire market to where the stops are.

Yes, of course it does. If I could move the market to where I know stops are,
I'd do it, too.

And maybe some day I will.

[autofx]

Originally Posted by rockinride

If you use say FXCM, REFCO, or any other monster brokerages, you sign away the majority of your rights in regard to price fluctuation, just to set up an account, read the fine print. You can call them on strange happenings, and occasionally they will accomodate you, but for the most part you are expected to trust your brokerage blindly with their data feed.

Yeah, they've got legal-ese in their agreements. They have to do that.

These guys know perfectly well that everyone with an Internet connection
can monitor a number of datafeeds.

How is it you're signing away your rights, exactly? Aren't you always free
to trade or NOT trade?