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Does the market know your positions?


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Does the market know your positions?

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  #41 (permalink)
Alvaro Martinez
Espaņa
 
 
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brmicha2000 View Post
Let's say that the institutions want to do a large sell order. Let's say that you are correct, and you also want to sell. You put your stop loss in an expected area, one that everyone expects, one that everyone uses, under some well known commonly traded system. The institutional traders think there is likely a lot of stop loss orders around those expected levels. The stop loss orders are buy orders. The institutions are selling so they need buy orders in order to fill the other side of their trade. They need lots of liquidity in order to fill their positions. Maybe somehow, they are able to manipulate price a little into that area, and set off the stop losses so that their sell order can be filled. That's the idea behind stop loss hunting. However, thinking that they are after some small time trader's stop loss is ridiculous. They have no idea about you, what you do, nor do they care. You could make 10 million dollars in one day, and they still wouldn't have any clue who you are. You could then cash out your 10 million and put it in assets that can't be tracked like rare gold coins, and put them in a safe deposit box. If you invest a billion in known stocks, that can be easily tracked, and you will end up in the Forbes 500 automatically, and have a bunch of idiots calling your house. I feel that most people who want to trade use the idea of stop loss hunting as an excuse, and they begin to believe that because of it, they can never be successful trading. That creates a self fulfilling prophecy, and they get what they believe. Traders can be successful in whatever they want to trade regardless of whatever the institutions are doing. The high speed algorithms also should have no impact on your trading, if you start to trade a strategy that works. Most likely, it will be a strategy that you created and tested, through practice and experience. Most likely, it will happen after many years of hard work and not giving up.

Thank you so much @brmicha2000

My name is Alvaro, I have been a retail trader in futures since 2014, I do the same strategy rebalancing by momentum with different instruments, today you have clarified a question that I have asked myself a thousand times. I usually work with ticks adjusted to the entry price and I have seen countless times how the stop loss has jumped on the same tick. I always worked with two hypotheses, either the broker is selling my orders to the market or the institutional ones have tools to detect stop market orders. I have even been thinking of hiding my market orders on the platform and not releasing them to the market until the price was at the exact point of my real stop loss, of course this has the inconvenience of slippage, that's why I discarded it at the time. But I was still thinking about how to solve this problem and today you have explained to me how the market works. Thank you very much.

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  #42 (permalink)
trend train
Riyadh, Saudi Arabia
 
 
Posts: 23 since Dec 2021
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Well, stop hunting term is there for a reason major platforms and financial websites have articles about it. For example investopedia, I remember I read article on tradingview about it too.

Brokers have suspecious policy to show or hide levels of your positions.
Some get so angry if you hide your levels to a degree they suspend or close your account.

Remember you trade against brokers including your own, institutions and Banks. Those are the ones who created support and resistance those who can move price any direction at any moment because they have insanely large volume!!

Most retail traders have SL positions either above resistance or below support that's why you notice price hit those levels before go in your direction. On order book institutions see volume pool on those levels so they push price to gain momentum then continue trends in your direction to reach their target tp. I know it is very sick thing to do but no ethics in this business as I learned from a metacapitalism theorist "greed breed dirt"!


Forgot to mention that doesn't mean you give up and stop using stop loss, but you need to know how, where and when.
Successful traders take risk management seriously and smartly. Because they know very well that at any second things can go south without any notice or sign.

Good luck

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  #43 (permalink)
brmicha2000
Denver, CO
 
 
Posts: 12 since Aug 2021
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trend train View Post
Well, stop hunting term is there for a reason major platforms and financial websites have articles about it. For example investopedia, I remember I read article on tradingview about it too.

Brokers have suspecious policy to show or hide levels of your positions.
Some get so angry if you hide your levels to a degree they suspend or close your account.

Remember you trade against brokers including your own, institutions and Banks. Those are the ones who created support and resistance those who can move price any direction at any moment because they have insanely large volume!!

Most retail traders have SL positions either above resistance or below support that's why you notice price hit those levels before go in your direction. On order book institutions see volume pool on those levels so they push price to gain momentum then continue trends in your direction to reach their target tp. I know it is very sick thing to do but no ethics in this business as I learned from a metacapitalism theorist "greed breed dirt"!


Forgot to mention that doesn't mean you give up and stop using stop loss, but you need to know how, where and when.
Sucessful traders take risk management seriously and smartly. Because they know very well that at any second things can go south without any notice or sign.

Good luck

I think there a lot of differences depending on what you trade. They call Forex the wild west of trading. FXCM got kicked out of the US, I think, because they were so corrupt. Futures brokers don't seem to have any interest in what you do with your trading. Forex brokers have what they call the A list of traders and the B list. The B list has a history of losing. The brokers actively trade against those people, sort of like the house at a gambling casino. Since those people have a history of losing, they have a high probability of winning if they just trade the other side of their positions. I don't really see why this has such a big impact on a traders trading, however, it does show that the broker is not really working for the trader. I don't believe that futures brokers have anything going on like this. They really couldn't care less what you do trading, they make their money from commissions, and so, they want to help traders be successful. I don't see why anyone would ever want to trade Forex. Currencies might be the most liquid, however, I think that most currency transactions are done because of how oil is bought and sold among various countries. In order to buy and sell oil, currency must be converted to and from US dollars. It is a strange system how oil is bought and sold. But, it creates massive currency conversions at certain given unknown times. I think that's what causes currencies to be liquid. Stock market index futures, however, I think are liquid because people trade in them. With Forex, it seems that its better if one creates an account with a broker like, Interactive brokers, where one has a fairly large account and doesn't seem like such a trading hack. I have never seen any evidence that anything is happening strange with my broker in Futures.

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  #44 (permalink)
brmicha2000
Denver, CO
 
 
Posts: 12 since Aug 2021
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Alvaro Martinez View Post
Thank you so much @brmicha2000

My name is Alvaro, I have been a retail trader in futures since 2014, I do the same strategy rebalancing by momentum with different instruments, today you have clarified a question that I have asked myself a thousand times. I usually work with ticks adjusted to the entry price and I have seen countless times how the stop loss has jumped on the same tick. I always worked with two hypotheses, either the broker is selling my orders to the market or the institutional ones have tools to detect stop market orders. I have even been thinking of hiding my market orders on the platform and not releasing them to the market until the price was at the exact point of my real stop loss, of course this has the inconvenience of slippage, that's why I discarded it at the time. But I was still thinking about how to solve this problem and today you have explained to me how the market works. Thank you very much.

I wanted to reply one more time. This stop loss hunting concept seems like it tries to simplify the market a little more than is realistic. However, the concept can make one start to think about things a little differently. Let's say you have a resistance. There is a lot of stop losses sitting at the resistance, since, traders often put their stop losses about resistances or below support. The market breaks back up just above the resistance. This takes out the stop losses in that area. Those stop losses are buy orders, which could cause the market to move up. However, many break out traders have also now entered long. The break of the resistance turns out to be a false break, and the market makes a high momentum downward move taking out the break out traders long trades. It hits the breakout traders stop losses, which causes the market to further fall, since those stop loss orders are sell orders. Do you see how much more complicated the market is compared to how much some want to simplify it?

Ok, let's take a less conspiratorial viewpoint. Here's a story to illustrate the idea. Let's make believe that, I am a large institutional trader. This morning, I go to the office. I believe it is a buy day, or a day to be long. I want to make a massive long order. The market has already gone up some. I decide to make a limit order under the current market price, around and Ema that I look at. I place the order. I leave for Starbucks, and I get a cappuccino, and I walk around the neighborhood. I sit in the park, and I feed the ducks. Meanwhile, the market goes down and fills some of my order. My order is so large that it can't be filled on one hit of the price. It is so large that it could probably hit it 12 times, and it still wouldn't be filled. The market repeatedly comes down and hits my price around 3 times. It fills around 25 percent of my order. The market is very volatile, and there are a lot of natural market fluctuations. So, each hit of my price does not stop and go back up right at my price. Some drive down below it, creating what looks like a false break of support. That takes out stop losses of traders who went long and put their stop loss directly under that support. I couldn't care less about the little people and their little stop losses. I get back to the office and I find out that 25 percent of my trade was filled. I guess I'll have to try to get more of it filled tomorrow, if its still a long day. I leave for a long lunch. I get back to the office in the late afternoon, and I fall asleep on my desk. I wake up at 7 pm, and I go home and watch TV.

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  #45 (permalink)
trend train
Riyadh, Saudi Arabia
 
 
Posts: 23 since Dec 2021
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brmicha2000 View Post
I think there a lot of differences depending on what you trade. They call Forex the wild west of trading. FXCM got kicked out of the US, I think, because they were so corrupt. Futures brokers don't seem to have any interest in what you do with your trading. Forex brokers have what they call the A list of traders and the B list. The B list has a history of losing. The brokers actively trade against those people, sort of like the house at a gambling casino. Since those people have a history of losing, they have a high probability of winning if they just trade the other side of their positions. I don't really see why this has such a big impact on a traders trading, however, it does show that the broker is not really working for the trader. I don't believe that futures brokers have anything going on like this. They really couldn't care less what you do trading, they make their money from commissions, and so, they want to help traders be successful. I don't see why anyone would ever want to trade Forex. Currencies might be the most liquid, however, I think that most currency transactions are done because of how oil is bought and sold among various countries. In order to buy and sell oil, currency must be converted to and from US dollars. It is a strange system how oil is bought and sold. But, it creates massive currency conversions at certain given unknown times. I think that's what causes currencies to be liquid. Stock market index futures, however, I think are liquid because people trade in them. With Forex, it seems that its better if one creates an account with a broker like, Interactive brokers, where one has a fairly large account and doesn't seem like such a trading hack. I have never seen any evidence that anything is happening strange with my broker in Futures.

you are missing the bigger picture PRICE moves the same either on CFDs or on FUTURES. I traded both and I can confirm its the same levels on the same time. only difference is leverage and spread do you want to pay $8000 for gold future contract or pay $80 for CFDs contract? other than that there is no escape, you will be exposed to the same price action.

big players don't trade against you because they know you. they see order book like traveller see gas station on a trip so ur stops are their momentum or if you like their fuel to continue the trip.

here I took screenshots I hope they help.

1- price action of gold today on TradeStation futures = on Oanda CFDs (delay on futures data due to my expired subscription &#128514
2- see illustration on gold chart how price move further when hit support and resistance.



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  #46 (permalink)
brmicha2000
Denver, CO
 
 
Posts: 12 since Aug 2021
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trend train View Post
you are missing the bigger picture PRICE moves the same either on CFDs or on FUTURES. I traded both and I can confirm its the same levels on the same time. only difference is leverage and spread do you want to pay $8000 for gold future contract or pay $80 for CFDs contract? other than that there is no escape, you will be exposed to the same price action.

big players don't trade against you because they know you. they see order book like traveller see gas station on a trip so ur stops are their momentum or if you like their fuel to continue the trip.

here I took screenshots I hope they help.

1- price action of gold today on TradeStation futures = on Oanda CFDs (delay on futures data due to my expired subscription &#128514
2- see illustration on gold chart how price move further when hit support and resistance.
3- see investopedia articles they wrote about it.




Interesting about the cfds. I don't think you can trade those in the US. I trade index futures, and the entry and exit is extremely fast, 1 tick non-changing spreads. The spread is a big deal. With the Forex brokers, they are always increasing the spread to high levels. That makes it very difficult for people to be successful. There is software where you can see the order book. But, can you imagine if anyone was actually trying to look at every single persons trade? Last month, one of my stock and options brokers made 140000 from selling options orders to companies that do execution of the options orders. They make 40 cents a contract. So, that broker is doing an incredible amount of contracts every month to add up to 140000 a month. No one can know or care about one particular person. However, they can see areas that are likely to have a lot of stop loss liquidity there that they can absorb, like support and resistances. The reality is, that everyday, I see absolute incredible amounts of what I call, failed, false, or fake breaks. I tend to think that one of the purposes of these is to try to fake people into trading in the wrong direction, and not to hunt stop losses. The institutions know that retail traders are an enthusiastic bunch that are excited to get into the next big move. So, that's why I tend to think of them as fake breaks. I think that the markets are all about faking people out. So, it could be understandable that they want to take out day traders stop losses. But, why would they stop loss hunt on the daily or weekly charts? These support and resistance holds or fake breaks exist on those time frames as well. Most traders who trade the weekly charts are investors and don't even use hard stop losses. So, why does this phenomenon exist on all time frames? Personally, I would just stop placing stop losses at spots that are probabilistic to get taken out. If one looks back at the history, one should start to see that fake breaks are a constant part of the charts. If one places stop losses at support or resistance levels, they are highly likely to get those taken out, and then, have the market run for them after they have taken a loss. So, it seems like a change in strategy would be warranted. This morning from 8 to 10, there were 8 fake breaks of support and resistance on my NQ futures chart on the time frame I trade.

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  #47 (permalink)
trend train
Riyadh, Saudi Arabia
 
 
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brmicha2000 View Post
Interesting about the cfds. I don't think you can trade those in the US.

i know many Americans trading CFDs, it's not as easy as futures you need to beat price, broker spread, broker commissions. usually, great choice if you are really good and experienced at trading. the leverage can be 1:50 up to 1:2000. for me i trade some instruments with it and some with futures.

if you are interested this is famous one based in USA since 1996! i don't know why you can't, you can also connect it with trading view which is based in USA too!

maybe they have certain requirements for Americans due to your country regulations, 90% of traders lose that's what they say in their website, but i find it great type of trading for learning and save money.

kindly look at the screenshot


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  #48 (permalink)
 SMCJB 
Legendary Market Wizard
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A simple Google search will reveal CFDs are illegal for US residents. I believe this is the CFTC trying to protect people from a) shitty brokers and b) using to much leverage.

As you correctly state Oanda is one of the largest FX trading platform in the world and is available to US residents. How can that be? It's actual currency pairs and not CFDs on currency pairs. US residents trading on Oanda are not allowed to trade Oanda CFDs.

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  #49 (permalink)
artisanpro
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brmicha2000 View Post
I think there a lot of differences depending on what you trade. They call Forex the wild west of trading. FXCM got kicked out of the US, I think, because they were so corrupt.


I use FXCM (Friedberg Canada) and I have not noticed any suspicious behavior / trades with stop loss orders. Now, having said this, I have learned that stop loss will be likely triggered at end / beginning of day i.e. from 16:55hrs to 17:05hrs from the simple fact that liquidity dries up and spreads go crazy large. So, knowing this, I cancel my stop loss orders for about 15-20 minutes or until spreads get back to a decent average spread. I agree that this is a risk but so far it has worked out for me.

As an aside, but still somewhat related, I came across some stats a few years back about FXCM forex client profitability. Those stats make me believe that this broker does not engage in systematic stop loss hunting because the % of profitable clients would be lower in my opinion. I have attached some of the historical screen shots.

FXCM Quebec Client 2017


FXCM Quebec Client 2018 - Friedberg Direct


FXCM Quebec Client 2021- Friedberg Direct


The link to the last table is:
https://www.fxcm.com/ca/legal/client-profitability/

I am missing the stats for 2019 and 2020 but I suspect that they are in line with the other years. Now based on these stats, 1 client makes a profit (size not told) for 2 clients losing (again size not told but likely large LOL). Again, I infer from these stats that some clients have likely no issues with stop loss orders.

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  #50 (permalink)
 jeronymite 
QLD Australia
 
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Do institutional traders/market makers know YOUR stops? No. Do they know the aggregate of retail trader stops (price and volume)? In many cases, yes!

Some years ago, I was shown a video by a respected professional Forex trader who explained that it showed institutional traders/market makers using a tool, similar to (perhaps based on?) MT4, but exceedingly enhanced to provide a DOM-like view of the market they wanted to view as a whole. So far, not too surprising. It was when the trader in the video selected the price he wanted to "clear out" to, clicked, and watched as the stop-hunter program did its thing! Bizarre, frightening, but apparently very true! This was Forex, so I do not know if the same capability was/is available for other markets, but it seems probable.

... ... Wish I had a copy of the video, but, alas, he did not provide it to me. I believe it was authentic, FWIW.

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