Day Trading & Forex Forum

wombat22

Hi all,
I'm just beginning to learn about FX trading and a thread on this site managed to convince me (luckily) not to part with a heap of cash to join LTG Goldrock. Can someone please explain what some of the posts meant about the broker hunting down stop loss points cause they can see all the trades lining up? Cheers

AlexGreen

FX brokers are not usually 'brokers' in the traditional sense. So they don't match an independent buyer and seller.

Instead, they'll normally take the opposing position to your trade so if you go long they go short. Which means they have a financial interest of you getting stopped out.

So if the market is 1.30 and they can see a lot of client sell stops at 1.2985 they might offer the market down to trigger the stops and then bid it back to 1.30.

Do they do it al the time? Of course not but it's something to watch out for because as a whole the online FX industry doesn't have the best of names.

If I was going to open an account I'd go with one of the larger brokers in the US. Search this board because there's a good post somewhere about capital capital adequacy ratios which shows who's big and who's small.

foredog

To be honest most of the people who thnk they've been "stop hunted" have just had a bad trade and got paranoid. They forget the trades where it went within 1 point of the stop before goign back their way.

Most reliable spreadbetters lke IG will not do this as they get their prices from 5 or 6 different banks so it would need all the banks all at one to push price the right way otherwise if one tries to push price down the other 4 would just take ther offers.

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AlexGreen

Yes, Dog is right. Running stops does happen but not that often and the more legit a broker is the less chance it has of happening.

And of course as Dog also points out it's human nature to try and blame something or someone when cash is lost.

Technically Fundamental

unless they put in a cost adjusted bid/offer into the market

wombat22

Thanks guys, I appreciate your feedback

AmateurTradersOnline

Why do they take a position against you?

Thanks

foredog

If you are buying the they are selling to you, they are then shortm they can either buy from someone else quickly and maybe lock in 1/2 the spread profit, or they could run the position, hope you're wrong and buy back cheaper later.

__________________
Thinking of paying for a course, read this first http://www.trade2win.com/boards/gene...tml#post707344

My blog of a simple GBPUSD system http://simpledibs.blogspot.com/ or here http://www.trade2win.com/boards/trad...side-bars.html