Continue reading...In this article I will examine more closely the common belief that those darn Forex brokers are “running” or “hunting” our stop loss orders. First, let’s define what this means. Running or hunting stops basically means that you enter a long (short) position with a sell (buy)stop loss a few pips below (above) your entry. The price action then comes to your stop order, takes you out, then the price action immediately reverses direction – often going directly to your first price target! Has anyone had this happen to them before? Do a quick internet search and you will find tens of thousands of references to this.
There are two main problems with this belief. The first is the psychology involved with this belief. Do you REALLY believe that the Forex broker is going after YOUR order? Is your position so important to the Forex broker’s profit and loss that they will run the market up or down to take you out so they can book the spread on one more trade today? In every class I teach, this...
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