stoploss hunting?

[Emma Rahman]

i head about stoploss hunting and about unfair broker companies that twist the charts in order to make their clients to loss money
How can I protect my self from this? And how do I choose honest brokers

 

[5of7]

Got dice??

 

[Pharaoh]

Check the reviews for multiple SL hunting complaints against a broker.

Run the broker's demo alongside their live feed. Also, run demo and live by a different broker. Turn on your ask line and watch the 1m or 5m charts.

Practice this on demo first - in a fairly flat market place a small order with a close stop. Watch the price and see how long it takes to get stopped out. Do this a dozen or more times.

Now, open orders in demo and live at the same time (keep order as small as possible and realize you are very likely going to lose a little bit of money). Make the orders as close as possible and give them the same SL. Does the live one regularly get stopped out faster than demo? If so, close your account, withdraw your money, and leave that broker a very bad review. If not, you can try some real trading with them.

 

[5of7]

Brokers are much more clever now. Or the software they use is much more clever.

They will wait until lots of traders are aggregated, and will only widen partially to catch the stops.

That's going to be nearly impossible to catch watching individual trades.

But the big new movement is on slippage which most people have no way of tracking. The most popular company that provides software to brokers built an artificial slippage model.

What this does is slip you a random amount on your order. Plus if you would have gotten positive slippage, they just take it instead of passing it on to you.

Slippage against you is going to be .3-1 pips. So if you think you are getting a great spread somewhere... surprise.

So unless you have a way of recording the price at your time of fill, and the actual fill price so you can compare them, you are out of luck.

Most people can't, so this is untrackable for most, and not so dramatic.

Sort of boiling you slowly instead of throwing you into the fire.

So my original statement holds...

got dice?

 

[Pharaoh]

Yeah, small slippage and 1 pip or less stophunting can add up. Still, there are plenty of bucketshops that will stophunt you 10 pips or more. Those can be spotted.

 

[5of7]

Agreed! You are right, the bucket shop should be the first test!

 

[Earl Hayek]

speaking of bucketshops...

On 18.8.2010 at 02:00 (GMT) my bullish trade on Gold was closed on S.L (price : 1221.00) by my so called honest broker, etorro.

When I looked on the chart, there was a huge spike so I called them up... They told me that there was "high volatility" on GOLD at that hour so it is not a spike and nothing can be done... :err:
I compared the charts with other brokers and saw no "volatile" movement on their GOLD's chart at this hours!! Quite the opposite, the chart seemed to show a relaxed market where the price never reached the value of 1221.00!!!

I showed the print screens to etorro, but they told me that their data is just as reliable as anyone else’s!
So to avoid stophunts and unwanted frustration, stay away from etorro for starters!

 

[Jerome Lemley]

That's good advice, Pharoah and 5of7.
But how do I tell the hunters from the slippers without getting burned first?
Too many times from my experience demo goes good and then live goes really bad. I would hate to lose substantial sums again.

 

[Pharaoh]

That's good advice, Pharoah and 5of7.
But how do I tell the hunters from the slippers without getting burned first?
Too many times from my experience demo goes good and then live goes really bad. I would hate to lose substantial sums again.

For testing a new broker, start with the smallest allowed deposit and trade with the smallest lot size available. If they burn you, close the account.

Determining what's a real market-based slippage vs. a built-in 1-3 pips slippage won't always be easy. Try closing some trades under calm market conditions and see what happens.

 

[florentin29]

slippage

hi everybody,

i understand the idea of slippage and i belive that it is not a good thing but in the sametime a consider that this aspect tend to affect traders which use to trade very freqvently ... and in this case is very bad

but those traders which use to make few trades based on a mixt of macro analisys and tehcnical analisys they'll be not very so disturbed about slippage aspect.

exist any tests to be made in order to provide a hint regarding if broker has slippage ?

10x