How to Avoid Stop Loss Hunting Of The Market Makers.
Market Players do wait for traders who trade against them. Market makers do expect and care about your weak Stop Loss placement and your soft Margin. You need to know, What, why, and how to use the stop loss.
So in this post, I am going to explain all the things about Stop Loss in Forex Trading and How to Avoid Stop Loss hunting. Read carefully and let me know your comments under the post.
Table of Contents
Stop Loss is the best part of managing the risk of your Forex Trading account. You can learn How to avoid Stop Loss Hunting in this post. Here is the Stop Loss hunt avoiding strategy in forex. You can be a profitable trader if you learn all the stop-loss secrets in forex. Here are those.
A Proper Stop Loss Help you to Save Your Account form the Bad Trades and the crashes.
Stop Loss definition | What is a Stop Loss in Forex Trading?
No one can predict the market with 100% accuracy. Even if they analyzed the market using all technical, fundamentals, and sentiment. You must use a sharp stop loss.
When we trade on a trading platform, we fix the targets, using our Risk and money management techniques according to our trading capital. As a trader, you need to identify 3 main areas to complete your trade.
- Entry Price
- Exit Price when Profit
- Exit price when loss
The stop loss is the exit price we use to exit from a trade when our trade goes away according to our trading plan.
A stop loss helps you protect your money while trading in the forex market. It does not matter if you are a scalper, day trader, swing, or even a position trader You must place the stop loss all the time if you are a good trader.
Why Stop Loss is so Important?
No one can say when the next tsunami is coming. No one can say there is not coming to any virus soon.
Some trades do not like to place the stop loss. They think they can close their every trade to a profit. But you have to Think about this. Every time you cannot say that you are in the right way. Also, The market can Crash at any time.
While the crashing of the market or your illegal trade, The Stop loss helps you to save your trading capital.
How do Calculate the Stop Loss in Forex Trading?
The loss is calculated by the pips. But some traders use Swing zones. Fibonacci zones to identify their zone. After identifying those zones they count the pips to determine their risk. we can use many things to place Stop Loss in Forex Trading
When you make your Trading Strategy, you need to identify a Good Risk-Reward Ratio. Also, need to backtest and find out, how accurate your strategy is?
Do Brokers Hunt the Stop Loss?
Some Forex mentors say the brokers do not hunt your stop loss. But we do say brokers and institutions both hunt the stop losses. Brokers do hunt your stop loss using the spread. They do expand the spread to hunt the stop losses. It is also called a slippage. You can learn more about it from this video on how to stop hunting works in forex trading.
Brokers make money by using a commission. This is a bit different story. However, some white-label brokers do bad things to earn money by losing the trading capital of their own clients.
I will Write another Blog Post About The Brokers. Market Maker brokers indeed target the stop losses to lose you. They do it using the Spread. Also, those guys can’t trigger your stop loss by placing the spike candles or any other fakeouts.
If your strategy can find the best place for getting entry to the Trade, then you can Profit. If not, your risked money will be lost.
So Do Not Put all your money into a single trade.
How do Market makers hunt the stop loss?
I will explain this using an example. We can all see a resistance level in this 4-hour time frame.
As usual, Everyone looking for selling opportunities in this area. Day traders and scalpers do use the 15-minute time frame to get their entry to trade.
You can see there are many entry points to sell here too. But, finally, they all stopped their sell trades. This is how the market makers hunt the stop loss of small traders.
Market players do monitor the stop-loss limits of small traders using their big Trading platforms.
Institutional traders need common zones to hunt stop loss. They wait for it. This is how market makers hunt the Stop Loss.
Can I Avoid Stop Loss Hunting Forex?
Yes. You can. All you need to do is use the right to place the stop loss exactly. You should identify the zones, where the big players target to hunt the stop loss. Even if you stopped out, that only happens if you trade for the opposite side.
After that, we have more money in our trading account to place another trade. We should place the stop loss by avoiding the common sl hunt zones to close our trade without blowing the trading account.
Stop Loss Hunting Secrets.
The biggest reason is the hunt to stop loss, which is support and resistance. Because more than 95% of traders trade with support and resistance zones.
Market makers’ (Commercial Traders) first job is collecting the small trade’s margin account and weak stop-loss zones. Then They Place their business against the primary Trend.
That means market Player’s Trend. Also, market makers have some restrictions. They cannot Trade everywhere, and they could not move the market, more than 20% of the initial Move (I mean as a Spike).
The Trailing Stop Loss
Trailing Stop loss you can use whenever you want. If you need to start buying with 10 pips risking and if you use trailing stop loss as 10 pips then Stop loss moves automatically, and the market moves 10 pips to the upside.
Techniques for Setting Stop Loss in forex.
Mainly we can see three types of stop-loss placing techniques.
- Stop Using Pips.
- Stop Loss using trading zone.
- Stop-loss using swing points.
Place stop loss using pips.
Most of the time day traders and scalpers do this thing. They do use stop-loss with the pips. It depends on their strategy. Some traders use 5 pips 10 pips or 50 pips for their trades.
10 pips Stop Loss
Many traders like to use their stop loss for 10 pips. But the Bad truth is If you are a Scalper or Day trader, then just you can place your stop loss after 10 pips. Also, use it if your strategy is a perfect fit for it.
You can understand about 10 pips risking stop loss on how to affect your account size using the screenshot above.
I use the stop loss as 10 pips. But I do it If I get 20 pips to return as a minimum reward.
Stop Loss using the trading zone.
Many traders use candlestick patterns and chart patterns to trade. Some of them do place their stop losses above or below the candlesticks patterns and chart patterns.
Stop-loss using swing points.
Few amounts of traders use this technique. They do place their stop loss above or below the swing position.
Stop Loss Hunt Trading Strategy | How to avoid Stop Loss Hunting
This is the best way that I use to avoid the stop-loss placement. If we trade for a Sell-side, we place our stop loss above or below the next swing point.
Every small trader must use Stop Loss if they need good accuracy for their trading strategy. Risk reward is important too. Beginner traders cannot get a few pips of stop loss from this technique.
But, with experience, you can go for at least 20 pips according to their strategy.
First of all, you need to know How market players and market makers behave in the forex market. Then you can easily understand how we need to place the stop loss.
Final Note of Stop Loss Hunting.
Many traders who use common strategies, place their stop loss at the common area. So you need to place your stop loss away from the familiar zone.
If there are many stop-loss placing techniques, you have to use your trading strategy‘s best stop-loss placement. It will help you to become a successful trader.
Think 1000 times before placing a trade, why do I take this trade and trust your strategy? Read the “How to Enter a Trade” post that is related to this post.
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