No Evidence of Stop Hunting by Retail Forex Brokers


The subject of stop hunting continues to come up quite frequently, especially where forex trading is concerned. In response to a thread on the subject, Skalpist left the following comments on a BabyPips forum entry (the main question of the thread was whether Oanda runs customer stops). I certainly haven’t done the kind of testing mentioned here, but I agree with the general conclusion.

I’ve tested this theory on A LOT of brokers. I have yet to find a broker that really stop hunts. One way to test this for yourself is to run multiple copies of MetaTrader each with a different broker.

At 4Squared, at one time we were doing this for 18 different brokers at once and tested across all of them for 6 months. In all that time, there was not a single SHRED of evidence that any of the brokers did anything remotely like what they are repeatedly being accused of.

Oanda was one of the brokers we tested.

Thus far, in all of our testing, we have found a 100% correlation between traders simply making poor trading decisions and their claims of stop hunting.

In short, Oanda doesn’t stop hunt, neither does IBFX, neither does FxOpen, or FXCM, or …

In the case of Oanda, they have something north of 1 billion in deposits and several hundred million in active trades. Do you really think a company that is making that much money servicing trades is going to screw it up in such an easily verifiable method of stealing? Give me a break.

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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
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  • Bourn

    This test as discribed in this article is not legitimate…

    • http://www.theessentialsoftrading.com John

      This test as discribed in this article is not legitimate…

      Because….? You cannot just throw out a statement like that without providing a reason. Support your position.

  • Bourn

    reason: the article is short – the statement is short :) Seriously: there are tons of evidence for “spiking” stop hunting… And also this test is “blind” to the “global stop-loss distribution” tracking… As far as for your “Do you really think a company that is making that much money servicing trades is going to screw it up in such an easily verifiable method of stealing? Give me a break.” – Well, similar things they were sayng about poor old Bernie….

    • http://www.theessentialsoftrading.com John

      You’ll have to educate us lowly types to what the “global stop-loss distribution” is.

      By the way, that “give me a break” part you’ve quoted is not mine. What I wrote is in green. The Madoff comparisson doesn’t apply, though. His results were obviously not easily comparable since no one could actually see what they were given he was the only one with the actual figures and providing the customers with phony reports.

  • http://forex-tradingtutorial.blogspot.com rushi

    i believe in found a 100% correlation between traders simply making poor trading decisions and their claims of stop hunting.