Can brokers (market makers) shake you out of a stop?

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Re: Can brokers (market makers) shake you out of a stop?

Postby jjay » Thu Feb 25, 2010 11:39 am

insider wrote:I have tried a few times to use breakout strategies.
It seems that almost everytime I get stopped out, exactly to the pip most of the time, only to see the market reverse and go to the didrection I wanted right after.
This cannot be bad luck or just a coincidence. I really think I should stop giving my money to these crooks...

What type of b/o strategy are you utilizing, & when do you usually look to engage your bets?

Your broker definitely won’t be targeting your individual stop. That's a comical fairy story that circulates these retail boards almost on a non-stop cycle.

The market hunts stops that are collecting & bunched at or around obvious psychological levels, such as key prior swing zones, prior days/weeks high-low levels, & particularly north & south of big figures (00’s & 50’s) especially if one of those big figure levels also include option barrier defenses.

You need to be very familiar with these levels & zones (& how they’ve reacted previously) as the price behaves when it encounters them.
If the move away from one of those zones is aggressive & sharp, that tells you decent bids/offers are defending it.
Depending on what's driving or influencing the current price action, the market will re-test these levels until it's either repelled with strength & conviction, or defensive stops/orders are absorbed & dissolved.
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Re: Can brokers (market makers) shake you out of a stop?

Postby Dann » Sat Jul 17, 2010 7:01 am

How would you suggest placing stops. I normally place my stops at these levels (big round numbers, just outside of trend channels etc) If these are the areas that alot of people place their stops and brokers 'hunt' these ... what would you do/where would you place stops ?
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Re: Can brokers (market makers) shake you out of a stop?

Postby JimmyMac » Sun Jul 18, 2010 5:13 am

Dann wrote:I normally place my stops at these levels (big round numbers, just outside of trend channels etc) If these are the areas that alot of people place their stops and brokers 'hunt' these ... what would you do/where would you place stops ?

It appears jj was addressing the comments regarding the previous posters frustrations & obvious lack of understanding about the consistent behavior of price flow around key levels.

How, where & why you place your risk defense will depend on the types of strategies & models you operate.

If you're trading via discretionary models & as long as you're satisfied with your overall success percentages, + your risk placements are doing their job by adequately defending your positions, then it shouldn't really concern you too much.
You should have no problems accepting an exit from a trade if the reasons for your initial entry are no longer valid – that's quite an important point & one of the key reasons for placing a stop-loss order in the first place.

Your risk percentage deployment should be a natural function of your overall strategy plan for that specific trade, & that might or might not include taking current volatility stats into consideration.

If however, you're not satisfied that your positions are fulfilling your initial aims & objectives for the specific trade positions, then maybe you need to look at the basic structure & composition of your set ups & models.
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