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Stop-loss hunting is the deliberate or opportunistic triggering of clustered retail stop orders by pushing price through obvious support, resistance or round-number levels. The fingerprint: a violent spread spike and a sharp wick, followed by an immediate reversal.
Why stop clusters form
Retail traders place stops in predictable places:
- Just beyond the previous swing high or low
- Round numbers — 1.0800, 1.0900, 150.00
- Daily/weekly opens or closes
- Bollinger Band touches
Aggregated, these stops form a thick band of pending market orders. Filling them creates instant volume — and instant counterparty fills.
The fingerprint of a stop run
- Price approaches the cluster from above (or below).
- Spread widens 3–10× in the last 10–30 seconds.
- One or two large candles spike through the level on thin liquidity.
- Stops trigger as market orders; the broker fills them at worsened prices.
- Price snaps back to where it was within 1–5 minutes.
Who is doing it
Two distinct sources, often blamed interchangeably:
- Real market participants — institutional players who know where stops live and intentionally fill them on quiet sessions. This is legal on most OTC venues.
- B-book brokers — internal market makers whose dealing desk widens spreads or executes off-feed prices to take out client stops. This is the conduct regulators sanction when evidence emerges.
Four defences that work
- Place stops past obvious levels. If the round number is 1.0800, your stop at 1.0795 will be hunted. 1.0775 forces a real move to trigger you.
- Reduce position size, widen stop. Same risk dollars, but a 50-pip stop is far harder to spike than a 10-pip stop.
- Switch to ECN / A-book. Brokers passing all flow to liquidity providers have no internal incentive to hunt your stops. Confirm execution model in the broker disclosures.
- Avoid the dead zones. Stop runs cluster in the New York → Sydney handover (22:00–00:00 UTC) when liquidity thins. Don't leave tight stops over that window without a reason.
How to verify
Compare the candle on your broker's chart against an independent aggregator (Refinitiv Eikon, Bloomberg, TradingView's FX_IDC feed). A spike that appears only on your broker is execution noise. Persistent disagreement is grounds for a written complaint and, if patterns continue, escalation to the broker's regulator.
Frequently asked questions
What is stop-loss hunting?
Stop-loss hunting is when a market maker (or coordinated participants) deliberately pushes price into clusters of stop-loss orders, triggering them to either fill house orders at better prices or generate spread revenue. It happens at round numbers, prior swing highs/lows, and round-number figures (1.0800, 1.0900).
How do you spot stop hunting?
Watch for sudden spread widening (3x or more) just before a sharp wick into a known support/resistance level, followed by an immediate reversal back to where price was. If the move only happens on one broker but not on a price aggregator, it is a strong signal of internal stop-running.
Is stop hunting illegal?
On regulated venues like CME, manipulating stops is illegal market abuse. On retail OTC forex, brokers running B-book trades against clients have more latitude — though FCA, ASIC and CySEC will sanction systematic abuse if evidenced. Switching to an A-book / ECN broker removes the conflict.
How do I protect my stops?
Place stops beyond obvious round numbers (e.g. 25 pips past 1.0800, not 5 pips past it). Use wider stops with smaller positions instead of tight stops with large positions. Avoid placing the same stop level as the bulk of retail traders — read order-book heat maps when available.
