Stop loss hunting

No, they won’t.

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Whatever it is the trade will happen on exchange, there is no way anyone can meddle with that, in US or other developed countries there is no need for the trade to be executed on exchange, it can be diverted to HFT firms, dark pools exist and broker can be counter party etc but in India it is mandatory for all the order to be placed and executed on exchange. All trades will come with trade number given by exchange. People should be more educated in terms of this. One can place sl orders upfront and there is no valid reason to doubt on this.

It was just an alternative suggestion. Both the methods have their pros and cons.

Your broker will always have the info about the stop-loss you set, because you send the orders through your broker (the only medium available to you).

Even if the trade is mandated to get executed at the exchange, your set stop-loss value can still be used by a market maker employed/working on the broker side to get a trade executed at your set value. They may know things/moves better than you - so if the market is about reverse, they can use it to their advantage.
Even if it is a small chance, it can still be a problem for illiquid instruments where there is a dearth of buyers and sellers.
This is not specific to one particular broker, but to the overall ecosystem in India.

The only way is to not set the stop-loss, watch the market moves, and only then place the orders.

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These are all fake theories, don’t believe in them, few traders who lose money will try to blame their loss on some imaginary stuff instead owing it to their trading plan, one can improve themselves only if they admit there is some improvement is required to their trading plan, if not they keep on losing and trying to blame it on someone else.

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hmmmmm… with algo trading, possibilities are endless, so nothing appears impossible or fake :slight_smile:
Stoploss orders are vital pieces of information - brokers have access to them so possibility of utilization (with/without algo trades) cannot be ruled out.

US/UK markets have this issue and is well acknowledged, so no wonder any other markets across the globe (including ours) cant have this.

Anyways, the original question posted by @Karan23 was about how to avoid the possible stop-loss hunting.

So the simple answer is - the ecosystem exists “as is”, and if you suspect SL hunting, avoid putting SL order. Watch the market and then place one. :+1:

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I have tried experimenting with these SL orders on BO only.

Basically I place an MIS order at the same value as the BO stop loss order and sometimes just 5 paisa lower than the sl.
Both mis and bo-sl are in the same direction.

I have noticed that many times only the BO stop loss is executed, but my mis is left untouched.

This experiment is for those orders that did not print in the intraday chart.

Please try out yourself and see if it’s making sense.
I have also seen that whenever I place a limit order at a low point it is untouched, but try placing a Buy using sl limit, the order gets filled.

Again keeping in mind the edge of the bands only.

Anyone interested in trying out please use small quantities only.

It doesn’t matter if your sl is at the support or below it, it’s bound to be taken.

I always use SL because a small loss is better than a sudden reversal and a big loss

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Perfectly mentioned. I have taken the hit on stoplosses in USA stocks trade.

With PNB, Karvy, ICICI scams happening openly in india, the possibility cannot be ruled out that this stoploss infomaton cannot being used for personal benefit by ppl having access to it.

SL details access ; only your broker can have .
None other .

No, SL sits with exchange only but in sl order book, once it trigger it will go normal order book based on limit or market.

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who can view SL order book of the Exchange ? can the other broker trading member or any other person view/know my SL ? can my SL order price level be leaked ?
@siva

We keep deleting your posts, because you keep spamming. We’ve restricted your posts, if this continues, we’ll suspend your account. You won’t be able to create posts. This is getting out of hand!

I have been reading up on Market Microstructures, and the author touches the topic of gunning of stop orders in the market. It is illegal and same time difficult to prove that someone is gunning the stop orders. It is mentioned that, specialists, dealers can try to gun the stop orders, and get the liquidity that they want, that too following the rules of the exchanges and always giving priority to the traders first. In case of NSE/ BSE, the orders are automatically crossed, so market makers / dealers / speculators may not get to see the stop orders as @siva explained. (I already raised this question seperately, then started researching in parallel)

We are all discussing as if the stop orders need to be in front of the experienced speculators, system traders. They make money by seeing the patterns and placing their orders accordingly. Think, if you have to gun the stop orders of an amature, what strategy will you follow? Looking at the order book would be the least helpful method. By seeing the price action, the speculators can try and guess where the stop orders can be, whether it is placed in the system or in a trader’s mind. Poker Anybody!!!

I have been practicing to keep stop loss only in mind, and at price levels which are not close to any support or resistance levels. This is where most of the technical traders / new system traders/ new speculators keep the stops. Even then, it is not fool proof, because price itself can randomly move. Another option that I took from the Turtles system is to keep the SL at 2 ATR distance from the entry price. These methods have kept me in the market for considerable time, and given space for the price to move.

Happy Trading.

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Can u pls explain this ?

What does it mean ?

If u keep the SL in mind and not in the system ; how do u protect urself in case of any black swan event ?

What is it ?

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Does every stop loss is caused by smart money or is there any foot print that planned stop loss hunting was executed by smart money?

Today I experienced what seemed to be an episode of Stop Losss hunting:

While implementing an intraday strategy, today morning I had sold BankNifty 33500 PE at Rs 18.70. At 14:30 Hours I put a ‘Stop Loss - Market’ (SL-M) order at Rs 37.55. Two minutes later, at 14:32, the price of PE soared from 15.00 to Rs 38.00 and my SLM was triggered and I was out of position at a handsome loss. After my SLM was hit, within few seconds price fell to Rs 18.00 and continues around this level.

Above seems to be a case of Stop Loss hunting. Has anyone experienced such Stop Loss hunting? How often does it happen and what is the solution?

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On some analysis I find that Banknifty itself recorded a steep fall in the 14:32 minute candle. This could have possibly triggered some Algo’s response to give a spike in the PE’s price.

Anyway, is there a way out of such spike triggers / stop-loss hunting?

This can be attributed to volatile movement causing the premiums to spike at all strikes causing a domino effect to quickly execute all the SL-M orders nearby. Remember when you have a SL-M order as stop loss, the other side some buyer also has kept a SL-M order to buy the option - buyer is assuming that there is an impending breakdown/breakout which essentially failed.

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I think this video will demystify the topic of Stop Loss Hunting:

You had a loss.