You've probably seen it mentioned in various trading forums. It may have even happened to you a few times. It's enough to make your head explode. What is it? It's called Stop Hunting. Here's a typical trading situation. You're convinced that the USD/JPY is heading up. You've entered a long position at 123.40 and you've set your stop at 123.05, slightly below an obvious double bottom. You set your initial target at 124.50, giving you more than a 3:1 ratio of reward to risk. Unfortunately, the trade begins to go against you and breaks down through the support. Your stop is hit and you're out of the trade. You're sure glad you had that stop in place! Who knows how far it could drop now that it's broken that support, right? Wrong. Guess what happens next. You got it...after taking out your stop, the price turns right back around and heads north, just as you originally thought it would. As you watch from the sidelines, the pair moves up past 124.00, then 125.00, and never looks back. Just maddening. You start to think, "If only I had set the stop just a little lower. What lousy luck!" But is this really just a case of bad luck? Let me relate one of my own recent trading experiences. Based on a statistical trading tool that I use, I went short the AUD/USD at around 0.7530 and placed a stop up at 0.7570 which was above a local top. I was looking for the price to decline to below 0.7300 over the next few weeks. Within a day or so the price spiked up, took out my stop and then moved back down into the consolidation area at around 0.7540. Now, because of this last spike, there were two local highs on the chart near 0.7570. Not to be deterred from my trade, I re-entered my short position in the 0.7530 area, and this time I put my stop at 0.7580, just above the last spike. After all, what were the chances that the price would break through that resistance again? Well as it turned out, that's exactly what happened! The price spiked up and hit my stop again, knocking me out of the trade for a second time. And even more frustrating, as soon as my stop was hit, the price turned right back down again in the direction I had originally anticipated! Ian Fleming's character, Goldfinger, once said, "Once is happenstance, twice is coincidence, three times is enemy action." (Play James Bond music here...)
However, I wasn't actually paranoid enough to think that someone was specifically picking off only my stop orders of course. First of all, my trades were so small that no one would bother trying to pick them off, and secondly I was doing these trades in a practice demo account! But I bet I wasn't the only dunderhead that was putting my stops in that obvious position just above the recent highs. There were probably quite a few buy-stop orders in that price area, and it certainly looked to me like someone was gunning for those stops. This hypothetical someone may have been a stop hunter. So what's a stop hunter and what's all this stuff about picking off stop orders? A stop hunter is a market player that attempts to trigger the stop orders of other traders for their own benefit. They generally have the capability to move the market by a small degree for a short period. The stop hunter may be a FOREX broker
's dealing desk which is trading in competition with its customers or it may simply be a large player in the market; a bank, a hedge fund or whatever. Stop hunters operate best in an environment where most traders believe that the market is about to move in a certain direction. As traders take positions, the inexperienced ones (like me in the trade above) will place their stops at obvious places in order to cut losses if the price moves in the other direction. The stop hunters know where the amateurs are probably placing these stops, so they try to move the market enough to trigger them. This may allow a stop hunter to enter a trade at a good price before the market begins its move in the direction that everyone expects. For example in my short trade above, there were a lot of indications that the market was headed down. Stop hunters knew that a lot of traders had taken short positions, and had probably positioned their buy-stops up at the 0.7570 area. So why should these savvy stop hunters enter a short position at 0.7530 when so many willing amateurs were willing to buy from them at 0.7570? So they proceeded to push the price up to 0.7570, and when my buy-stop order was triggered up there, guess who I was buying from? Exactly...the stop hunters who were selling to me at a great price (for them). Now I was out of the market, and they had taken over my short position at a price 40 pips above where I entered it. I had a 40 pip loss, while they entered at a price that was 40 pips better than they otherwise could have. Then, when the market headed down as we all expected it would, the stop hunters were laughing all the way to the bank while I was sitting on the sidelines pulling out what little hair I have left! Note that a situation in which everyone expected the market to move up would work in just the opposite fashion. The amateurs would have their sell-stops at some obvious point below the market, and the stop hunters would push the market down in order to trigger those sell-stop orders. Then the amateurs would be selling out of their long positions in a panic while the stop hunters were buying from them at great prices in expectation of the coming move north. The type of stop hunting that I've just described is used in situations where most market participants expect the price to move in a certain direction. In this situation, both the savvy stop hunters and the amateurs have the same market opinion; they are not battling each other in a contest of bulls vs. bears. The stop hunters are just trying to take over the positions of the amateurs at a good price. There is another situation in which stop hunters try to move the market toward a group of stops in the hope that triggering the stops will push the market further in the same direction, thus triggering even more stops and so forth in a snowball effect. This is how some short term panics and rallies are created. In this case, the stop hunters have taken positions in the opposite direction from the amateurs, and are simply trying to trigger the stops to get the amateurs to panic and keep the ball rolling in that direction. My guess is that this tactic is more prevalent in less liquid markets like stocks and futures as opposed to FOREX.

That's why I don't use any stops at all.

If you want to use stops, I think you can just place them at a price where they're unlikely to be triggered by a stop-hunting spike.

But it'll be a disaster as soon as the opposite trend is actually coming. [ 本帖最后由 阿拉上海拧 于 2007-4-29 16:39 编辑 ]

by Abe Cofnas When markets move, particularly in Forex, they move fast. We all have witnessed breakouts and have had the occasion to lament a trade that got away. The beginning trader sees breakouts as a way of riding a strong wave of volatility and providing a quick profit. The problem with the strategy of playing a breakout is that breakouts are technically unstable. They present difficult questions to answer, such as: How long will it last? Especially when there is an absence of news, the question of what caused it is difficult to determine. The better way to trade a breakout is letting the breakout occur and waiting for a subsequent pattern to emerge. Often a Fibonacci retracement pattern emerges, providing trading set-ups. Let's look at some patterns. A recent breakout occurred in reaction to the Treasury International Capital Report on November 16 at 9AM EST. This report tracks foreign ownership of US Treasuries and provides an important measure of global sentiment for the dollar. If foreign ownership of US Treasuries is perceived as trending down, this fundamentally weakens the attractiveness of dollar based assets and therefore is a bearish factor for the dollar. On the other hand, if foreign ownership of treasuries is increasing, then the underlying support for the dollar is stronger. Furthermore, if a particular report surprises the market, a breakout pattern occurs. Here is what happened. The market surged down on the EURUSD because the report provided data showing greater than expected buying of US Treasuries. Here is the latest table which can be accessed at: www.treas.gov
. In reviewing this data, we can see that Japan, China, and Britain remain major buyers of US Treasuries amounting to $1224 billion dollars and comprising 59% of the 2.065 Trillion dollars! The 2005 rise of the US dollar is a consequence of the ability of the US to attract ownership of US treasuries. The day will come when the surprise is on the other side and it may be that this report will signal the end of the bull trend in the dollar when that happens. But the trader does not have to read the report to trade the response to the news. By waiting for the market to react to the report, and then by watching for a retracement of that pattern, the trader can avoid the risks of trading the breakout and still obtain a trading opportunity. The following chart shows that the initial reaction to the TIC surprise report was down and the EURUSD proceeded to decline from 1.1698 to 1.1660 (48 pips). The price action then in 3 minutes temporarily retraced above the 61.8% line. We see that it fell back and tried again to test the 61.8% fib (1.16835). The second attempt and failure to move further up was a good entry area for a short. The action tried to test the previous low at 1.1600 again several minutes later, bounced off it and then probed the 38.2% line. The failure there was another selling opportunity. We can see that within 1/ 2 hour of the TIC report, those that missed the initial break down had two more good entry potentials for selling. Next time you consider a breakout trade, the strategy of letting it break may give you more opportunities and more reliable set ups.

The "stop hunting with the big specs" is an exceedingly simple setup, requiring nothing more than a price chart and one indicator. Here is the setup in a nutshell: On a one-hour chart, mark lines 15 points of either side of the round number. For example, if the EUR/USD is approaching the 1.2500 figure, the trader would mark off 1.2485 and 1.2515 on the chart. This 30-point area is known as the "trade zone", much like the 20-yard line on the football field is known as the "redzone". Both names communicate the same idea - namely that the participants have a high probability of scoring once they enter that area. The idea behind this setup is straightforward. Once prices approach the round-number level, speculators will try to target the stops clustered in that region. Because FX is a decentralized market, no one knows the exact amount of stops at any particular "00" level, but traders hope that the size is large enough to trigger further liquidation of positions - a cascade of stop orders that will push price farther in that direction than it would move under normal conditions. Therefore, in the case of long setup, if the price in the EUR/USD was climbing toward the 1.2500 level, the trader would go long the pair with two units as soon as it crossed the 1.2485 threshold. The stop on the trade would be 15 points back of the entry because this is a strict momentum trade. If prices do not immediately follow through, chances are the setup failed. The profit target on the first unit would be the amount of initial risk or approximately 1.2500, at which point the trader would move the stop on the second unit to breakeven to lock in profit. The target on the second unit would be two times initial risk or 1.2515, allowing the trader to exit on a momentum burst. Aside from watching these key chart levels, there is only one other rule that a trader must follow in order to optimize the probability of success. Because this setup is basically a derivative of momentum trading, it should be traded only in the direction of the larger trend. There are numerous ways to ascertain direction using technical analysis, but the 200-period simple moving average (SMA) on the hourly charts may be particularly effective in this case. By using a longer term average on the short-term charts, you can stay on the right side of the price action without being subject to near-term whipsaw moves.

For example, if the price of the EUR/USD is approaching 1.2800 downward, mark lines 15 pips on each side of 1.2800 at 1.2815 and 1.2785. This 30 pip area is known as the "trade zone." 1.2800 is used as the stop hunting level since these round numbers are where speculators will try to target stops. The idea here is to quickly ride the momentum for a quick profit. If you determine with your indicator of choice which direction momentum is going or which direction the trend is going, you would want to trade in this direction. For this example, let's say that momentum is down and the price is below a moving average. You would short the EUR/USD at 1.2815 with at least 2 lots with a stop at 1.2830 and an initial target of 1.2800. If the price continues down and hits 1.2800, close 1 lot. Set the target of the second lot at 1.2785. At this point, you have already made 15 pips so your risk now is 0. If the price continues down to 1.2785, you have made 30 pips on the second lot and 15 pips on the first for a total profit of 45 pips. If the price did not continue down to 1.2785 and instead retreated back above 1.2815, you would have neither gained nor lost.

谢谢转贴. 现在回味,上次咱是碰上stop-hunting了.怪不得broker那边换了两人来解释,却都跟"录音机"似的,只反复 反复 反反复复地念台词,把S/L跟L的含义重复N遍. 不懂规则,不好赚钱的. 今后还要花些工夫来研习这些"潜规则"