Question by Procto-Boy: Is it possible for a market maker to “run stops” (deliberately trigger a stop) in currency trading?
I know this happens in stock trading, but what about in currency trading? I don’t know if there are actual market makers in currency markets. I’m asking because twice in one day, my stop was hit almost exactly and the price immediately reversed.
Best answer:
Answer by naaner
Yes, it is the same thing as stocks. However, with forex the bands are much tighter so it always seems as though you get close to them but never hit.
Know better? Leave your own answer in the comments!
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I had a mini account that is now inactive and I was trading on it just for fun but I was often frustrated that I would set up an overnight trade with stops and it would seem to trigger the trade and then reverse at my stop loss so I lost money. I can’t really explain it.
oh yes, you bet your (whatever) they do. i’m talking futures, of course. and because many contracts are rather thin on the IMM over at the CME, it is their duty to rip everybody a new hole. i mean, if you had enough size to move the market, wouldn’t you?
they know where all the support and resistance is, the levels where a lot of likely orders are standing etc. basically, its a shake down just like any other kind in any market or on your street corner.
the less deep or liquid a market is, the more chance this will happen. just try to trade some livestock or poultry. mmmm bacon. the smell of pigs being slaughtered as a new trader enters the market for the first time.
if you can stay around long enough you’ll figure it out.
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