What is Stop Loss Hunting?
As you know forex brokers make money when you take a position. They charge you some pips when you buy a currency pair. This number of pips that brokers charge when you buy currency pairs is called spread. Different brokers have different spreads for different currency pairs. Spread is almost the only way that the forex brokers make money.

Good and reliable brokers are happy with the money they make through the spreads BUT there are some scam brokers who are not satisfied with this and want to make more money. Stop loss hunting is one of the ways they use to do that. They have some special robots or hire and train some employees who monitor the clients trades.

When a client takes a position and sets a stop loss and the market goes against the position and becomes so close to the stop loss, the robot or the stop loss hunter employee increases the spread manually to help the market hit the stop loss sooner. For example you take a short position with EUR-USD at 1.3180 and you set your stop loss at 1.3280. You have a short position and to close this position you have to buy. So your stop loss is in fact a buy order. You pay the spread only when you buy. So you don’t pay the spread when you go short. You pay it when you want to close your short position and so you buy.

Ok! Back to our example. You have a short position at 1.3180 and your stop loss is at 1.3280. The market goes against you and goes up to 1.3275 which is only 5 pips away to trigger your stop loss. As your stop loss is a buy order so the amount of the spread has to be added to the market price and if the result is equal to your stop loss value, it will be triggered. So the market is against you and is only 5 pips away from your stop loss value but it doesn’t mean that it has to go up 5 more pips to hit your stop. If your broker charges you 2 pips for EUR-USD, this 2 pips has to be added to the market price which is 1.3275.

So in fact your buy price will be 1.3277 which means it is only 3 pips away from your stop loss. If the market changes the direction and goes down at this stage, your stop loss will not be triggered but this is the opportunity that the scam brokers wait for it. As soon as the market becomes so close to your stop loss, the broker increases the spread. So while the spread is 2 pips and so the market is only 3 pips away from your stop, the broker adds at least 3 more pips to the spread to hit your stop loss. You think that you have lost your money in the market and because of the bad position you had taken, but in fact you have not lost it in a real trade. The broker has increased the spread to pretend that your stop loss is triggered but in fact it is not. The money you have lost is in the broker’s pocket.


I have experienced this myself. One day I have been watching the market through a very famous broker platform. I was checking both the live and demo account and I had one position with the demo account and one with the live account, both at the same time and price and with the same currency pair. Suddenly I saw that my position with the demo account triggered the target but the live account position was still open. When I checked, I found out that when the price became so close to the target, the spread was increased to prevent my position from hitting the target. The spread jumped from 4 to 14 in one second. It attracted my attention and I kept on monitoring the broker and I found out that they do the same thing when the price becomes so close to the stop loss. While the demo position is still open and has not triggered the stop loss, the live position becomes closed by the stop loss. So a trade that could make only $400 for the broker through charging 4 pips as the spread, made $10,000 for hitting a 100 pips stop loss. Easy money!

Why don’t they let the target to be triggered by increasing the spread?

If they let your target to be triggered, your trade will be closed and you will make a profit but if they keep your trade open, it is possible that the market goes against you and then they can hunt your stop loss.
As soon as I became 100% realized that they hunt my stops and don’t let the targets to be triggered, I enlightened all traders I knew. If you Google for it you can still find some of my posts on different forums. It also caused me to get some infractions from some forums because they work for those brokers. I think two of them even banned me and many of them deleted my post completely.

Can they succeed to hunt your stop loss or prevent your target all the time?
Not all the time. They try their chance. When the market goes to your direction strongly they can not do anything and your target will be triggered. Also when your position goes to your direction right away and doesn’t get close to your stop or when you have a wide stop loss, they can not do anything.
What should you do?

• Choose a reliable and well-know broker. Always check the reviews before you sign up. Do not be deceived by those brokers who are proud of having no dealing desk. Some of them may have no dealing desk but they do have stop loss hunter employees!
• Do not set tight stop losses and always consider the maximum spread.
• Try to take the best positions at the right time.

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Many people are excited by the idea of trading in a 24-hour market, going head-to-head with the “big boys” and controlling large amounts of currencies. Other people are terrified by this prospect. They want to try currency trading, but the image they have of a Type-A, caffeine-charged, numbers crunching, stressed-out trader is not consistent with their personality or the type of lifestyle they desire. Does a Forex trader’s life really need to be filled with stress?

How Stress Develops
Let’s look at where stress originates. I could discuss several psychological topics on stress, but that would not be useful to a trader who simply wants to trade Forex without substantially increasing the amount of stress in his life. So, where does stress come from?
The short answer is uncertainty. A trader’s life is filled with uncertainty: Will I make or lose money on this trade? Will I get a margin call? What will happen to the USD today? How will the payrolls report affect the market? The questions (and the uncertainty) are endless. Traders choose a unique way of life with challenges that many other professionals simply don’t encounter on a daily basis. Uncertainty is injected into each trading day -- and each trade.

How to Control Stress

Before you start to think that stress is simply a part of every trade that cannot be controlled and definitely never eliminated, think again. There are aspects of a trade that we simply cannot control, like how the employment report will affect the market or whether interest rates will increase or decrease. (Many traders consider this uncertainty to be exciting.) However, we can participate in the market’s excitement while controlling the uncertainty and minimizing the losses. Below are a few ways to control trader stress.
Use A Trading System
Trader stress can be reduced by using a good trading system. There is no need for a lifelong quest for the holy grail of stress reduction or searching for the secret of the stress-free trade like a modern day Ponce de Leon! The wisdom of the stress-free trade can be found in a good trading system.
Use Risk Management Techniques.

• Always use your stop loss orders . They will allow you to sleep soundly.
• Always use limit orders to lock in profits. Remember you never lose money when you take a profit. You lose money when you lock in losses or let profits run down to losses.
• Don’t let fear or greed control you.
• Use margin in moderation. Remember, it can be a useful tool to multiply your profits, but it can also make losses grow exponentially.

Less Common Ways to Reduce Trader Stress

These techniques may seem irrelevant or that they are not directly related to trading, but experienced traders know that they are useful and help to keep you trading through the worst of times.

• Know the big picture. No trade exists in isolation. The Intermarket approach notes that every trade is part of a larger picture. Each trade must fit into that picture like a piece of a puzzle. This means every trade must have a reason or purpose of which the trader is acutely aware. This transcends trading for money. It refers to the adoption of the trading lifestyle that is consistent with your personal goals and values.
  
• Practice Detachment. Once a trade is placed, let it go. Every trader knows the temptation to constantly watch how a trade is performing. The detailed, real-time information available on the Internet makes it possible to watch a trade as it moves up or down. Resist the urge. If you have a good trading system with your stop orders in place, there is nothing more for you to do on this trade. Constantly watching it with your finger over the sell button can be very stressful.
  
• Have a Panic Button. Every trader has his or her moments of panic. When a trade is going the wrong way, traders often wonder whether they should close the trade (even when their trading system says to hold). The market can be quite volatile and any set of triggers can cause a trader to panic. When panic sets in, the trader can simply press the Panic Button. A Panic Button is any action helps to alleviate tension or break the rising anxiety cycle by diverting the trader’s attention from the immediate trading stressor. Consider exercising, taking a walk, or counting to ten.
  
• Remember Your Trading Wisdom. The trading wisdom is the lesson learned from this trade. Using only positive language, write down anything you learned from this trade. This technique helps the trader to feel more control and reduce the level of uncertainty in present and future trades.
  

Trading Forex does not have to be stressful. Taking simple steps can help control the primary cause of trader stress: Uncertainty. And they can also help the trader to feel more happiness and less anxiety in trading Forex.