A regulator has caught bank traders trying it. But the stop hunt most traders feel has a far more ordinary cause

Published: 17 October 2026 · Last updated: 5 September 2026 · By Spencer Li, CFTe

You place a stop just under the obvious low. Two days later, price dips a few cents below it, fills your stop, and then rips higher without you. It feels personal. It feels like someone saw your order and went after it.

So is stop hunting real? Yes, in two very different forms. The first is misconduct that regulators punish. Banks have been fined after a regulator found their traders tried to trigger clients’ stop orders. The second is everyday market mechanics: stops pile up at the same obvious levels, and that pile of orders attracts price like a magnet, without anyone knowing or caring where your stop is.

The difference is between being hunted and being herded. Being hunted needs someone who can see your order. Being herded only needs you to put your stop where everyone else put theirs. For most traders in liquid stocks, the second is what is happening.

Has stop hunting ever been proven?

Yes. And it is worth being clear about this, because people who say “it is all in your head” are wrong about the history.

In November 2014, the UK’s Financial Conduct Authority imposed “fines totalling £1,114,918,000 ($1.7 billion) on five banks” over their foreign exchange trading. Among its findings, traders “attempted to manipulate fix rates and trigger client “stop loss” orders.” In plain words, a bank that held a client’s stop order could push the price to that level, fill the stop, and profit from the difference.

A different case shows how big players can fake the order book. In September 2020, the US Commodity Futures Trading Commission ordered JPMorgan to pay USD 920.2 million, which it called “the largest amount of monetary relief ever imposed by the CFTC.” Its traders had “placed hundreds of thousands of orders” with “the intent to cancel those orders prior to execution,” which created false signals of supply and demand.

Do note what both cases have in common. In each one, the firm could see the orders, or was placing them itself. That is what makes the hunted version possible.

Why does it feel like your stop always gets hit?

Because stops cluster, and a cluster of stops is a pool of guaranteed orders.

Think about where most traders put their stop. Just below the obvious swing low. Under a round number. Below yesterday’s low. Every textbook teaches the same levels, so a lot of stops end up in the same small area.

Now think about what a sell stop actually is. It is an order to sell at whatever price is available once a level is touched. A hundred of them under one low is a hundred sellers who will sell at almost any price. For a large buyer who needs to fill a big order without pushing the price up, that is the best place on the chart to buy.

So price reaches the level, sometimes on its own and sometimes with a nudge. The stops fire. That burst of selling pushes the price lower for a moment, which triggers the next layer of stops. Then the forced selling runs out, the buyers have their shares, and price snaps back.

Nobody in that story knows your stop. The same thing would have happened if you had no position at all. You joined the crowd by putting your stop where the crowd put theirs. That is the herded version, and it is by far the more common one. Our post on false breakouts shows the same mechanics from the other side.

A trader asked on a day-trading forum: “Is stop hunting/stop run real or just paranoia?” The honest answer is that it is real mechanics, and paranoia about the motive.

Where is stop hunting most likely to happen?

It depends a lot on what you trade and who holds your stop.

That last row is worth explaining. A standard stop order held by many brokers is not shown on the exchange’s order book. It waits at the broker and only becomes a real order when its price is hit. So in a liquid stock, nobody scanning the book can see it. The level may be obvious, but your order is not.

The first row is where you need the most care. With a dealing-desk broker, the firm sees your stop and may be your counterparty as well. That is the same structure the 2014 case was about, on a smaller scale. Our guide on how to choose a forex broker explains what to check, and if you trade with leverage, what happens in a CFD margin call is worth reading first.

If you want a routine that keeps your stops planned instead of rushed, our free 15-Minute Swing Trader’s Checklist covers the questions to ask before every trade. Get the free checklist →

How do you protect your stop loss from being hunted?

You cannot stop the market from visiting obvious levels. But you can stop being part of the crowd that gets flushed out there.

1. Exit on the close, rather than intraday. For swing trades, decide your exit on the daily close. A wick that pokes through your level during the day and closes back above it never triggers you. This one rule removes most of the “hunted to the tick” pain.
2. Put a buffer beyond the obvious level. Go a little further than everyone else, sized to how much the stock normally moves. The ATR, the average daily range, is a common way to size that buffer.
3. Use odd numbers. Stops pile up at round numbers. Placing yours a little away from them costs nothing.
4. Trade smaller with a wider stop. A wider stop with a smaller position risks the same amount as a tight stop with a big one. But it gives the trade room to survive a normal shake-out. Where to put your stop loss goes through how to pick the level.
5. Know your order type. A stop-market order fills at the next available price. A stop-limit order may not fill at all in a fast drop, which can leave you holding the whole move down. Order types in trading explains the difference.
6. Trade the failed move. When price flushes through a level and closes back above it, the trapped sellers have just left. That reversal is a well-known entry in its own right.

What is the real risk with stop hunting?

The real risk is the belief.

A post on a day-trading forum this year was titled “The Market Knows My Stop Losses.” The feeling is easy to understand. But once you believe the market is out to get you, every loss has someone else to blame. That makes it very hard to fix the things you control, like where you placed the stop, how big the position was, and whether the setup was any good.

The belief also tempts traders into the worst possible fix, which is trading with no stop at all. That turns a small, planned loss into an open-ended one. And when everyone around you is blaming the same villain, it is worth asking whether you have just joined another crowd. Our post on herd mentality in trading looks at how that happens.

There is a deeper point too. Research by Kaminski and Lo, published in 2014, found that whether a stop helps depends on how the market you trade behaves. In markets that tend to keep trending, stops can add value. In markets that tend to snap back, they can cost you, with or without anyone hunting them.

So, on your last stop-out that felt hunted, was your stop where everyone else’s was? And did the price close through your level, or just poke through it during the day? For more on managing risk, see the guide to money and risk management.

FAQ

Is stop hunting real?

Yes, in two forms. A regulator fined banks after finding their traders tried to trigger client stop orders. The everyday version is stops clustering at obvious levels, which attracts price without anyone targeting your order.

What does stop hunting mean in trading?

It means price moving to a level where many stop orders sit, triggering them, and then reversing. Sometimes it is deliberate. More often it is the natural pull of a large pool of orders.

Can brokers see your stop loss?

Your own broker can. With a dealing-desk forex or CFD broker, the firm may also be on the other side of your trade, which is where the risk is highest. On a stock exchange, a standard stop order held at the broker is not shown on the public order book.

How do you avoid stop hunting?

Exit on the daily close, put your stop a buffer beyond the obvious level, avoid round numbers, and use a smaller position with a wider stop. Trading liquid markets through a broker that is not your counterparty also helps.

Should you trade without a stop loss to avoid stop hunting?

No. Removing the stop swaps a small, planned loss for an open-ended one. A better stop placement is the fix.

Go deeper

Most stop-loss pain comes from decisions made in a hurry. The free 15-Minute Swing Trader’s Checklist has the daily routine, the questions to ask before every trade, and the five rules that protect your account.

About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

The classic trading books, one simple drawing method, and the one rule they all agree on

Published: 17 October 2026 · Last updated: 22 June 2026 · By Spencer Li, CFTe

Open any daily chart of a stock in a clear uptrend. Find two higher lows, a few weeks apart, and connect them with a straight line. Extend the line to the right. That is a trendline.

The hard part is everything after that. Which lows count, when is a line broken, and what do you do when it is? Here is the short answer. Draw the line through the lows that price has actually touched, and the more touches the better. Judge a break by the close, never by a wick that pokes through during the day. Then wait to see whether the break holds before you act on it.

The sections below cover each step, how channels work, and where the classic books disagree with each other.

What is a trendline, and why does it work?

A trendline joins the lows in an uptrend, or the highs in a downtrend. It shows the angle at which buyers have been willing to step in.

Edwards and Magee, whose book is still the classic on chart patterns, observed that “nearly all Minor and most Intermediate Trends follow nearly straight lines.” They also admitted they did not know why prices so often pull back to the line before carrying on. In their words: “NO ONE KNOWS WHY.”

One likely reason is less mysterious. Plenty of traders draw the same obvious line and place their orders near it, so a line that thousands of people watch ends up mattering because of all the orders sitting around it. It keeps working for as long as they keep watching.

How do you draw a trendline correctly?

Here are the drawing rules most of the classic books share.

1. Use at least two touches to draw it and a third to trust it. The more times price has touched the line and turned, the more it matters. Touches count for more than length.
2. Never draw the line through price. If you have to cut through candles to make it fit, it is the wrong line. Adjust it or drop it.
3. Expect the flatter line to last longer. A very steep line breaks sooner, and when it does, the trend tends to pause and drift sideways for a while, whereas a gentler line can carry a trend for many months.
4. Use log scale for long, strong trends. On a chart covering years, a stock that doubled several times will curve away from a straight line on a normal scale.
5. Draw on the daily or weekly chart. Lines on short intraday charts get broken all the time and mean far less.

That fourth rule trips up a lot of people. A trader asked on Reddit, “Trendlines on log charts or normal charts?” Their line had held on a normal chart and broken on a log chart, and they wrote, “Now this makes me question my entire thought process!” It is a fair reaction. For a few months of data, the scale barely matters. Over several years, Edwards and Magee noted the gap “may become MARKED,” and most of the books prefer log scale for long trends.

When is a trendline really broken?

This is where the books disagree, and it is worth seeing exactly how.

Do note what they all agree on. Every one of them wants more than a quick poke through the line during the day. A close beyond the line counts for more than a wick, and a break that holds for a few days counts for more than a single close.

So a sensible rule is to judge on the daily close, and then wait for the hold. Which of the filters is best is still an open question, because the books argue for their own filters with examples rather than with counted results. If you want to see why so many breaks fail, our post on false breakouts goes through how to spot them.

Want a simple way to check a chart in minutes each day? Our free 15-Minute Swing Trader’s Checklist has the routine and the questions to ask before every trade. Get the free checklist →

What should you do when a trendline breaks?

Usually, nothing yet. Pring wrote that “Whenever a trendline is violated, the odds strongly favor a change in trend.” But a change in trend can mean a pause or a sideways range just as easily as a reversal.

The thing to watch for is the retest. After a clean break, price often comes back to the broken line from the other side. If an old uptrend line now acts as a ceiling and price turns away from it, that is a much stronger signal than the break itself. Our post on how resistance becomes support explains why old lines flip their role.

And if price breaks the line, then closes back above it within a bar or two, treat that as a failed break. The trend you thought had ended is often still alive.

The break of a long-term trendline, one that has held for many months, is rare. It is one of the strongest reversal clues on a chart, and even then the retest is worth waiting for.

Edwards and Magee added one useful warning. “In cases of speculative BLOW-OFF, TRENDLINES ARE OF LITTLE USE.” When a stock goes nearly vertical, there is no sensible line to draw, so do not force one.

How do you draw and trade a channel?

A channel is just a trendline with a parallel partner. In an uptrend, draw the trendline under the lows. Then copy it and move the copy up so it touches the highs. The upper line is often called the return line.

Here is how traders tend to use one.

• Buy near the lower line, in the direction of the trend. That is where the risk is smallest, because the line is close and the reason for the trade is clear.
• Use the return line as a target. Many traders take some profit when price reaches the upper line of an uptrend channel.
• Be careful with breaks of the return line. Al Brooks, writing about intraday charts, found that a break above the top line of a channel fails within about 5 bars more often than it carries on. A sudden spurt above the channel is more often a sign of a tired trend than the start of a faster one.

Do note that this kind of channel is drawn by hand from price. Keltner channels and other indicator bands are calculated, which is a different tool, covered in our post on channels, bands and overlays. Two common chart patterns are built from channels too. A flag is a short channel sloping against the trend, and a wedge is a channel whose lines are converging.

How do trendlines fit with market structure?

Think of a trendline as a quick sketch of the trend, and market structure as the full picture. A trendline tells you the angle. The sequence of higher highs and higher lows tells you whether the trend is still intact. When both break together, the case is much stronger than when only the line goes.

Market structure trading covers how to read those highs and lows.

Trendlines are among the most useful tools on a chart, as long as you treat them as zones rather than razor-thin lines. Price is not a ruler. A line that price respects within a small margin is doing its job.

So go back to the chart you opened at the start and count the touches on your line. Then look at the last time price broke through it, and ask yourself honestly whether you would have jumped on that break straight away, or waited for the close and the hold. For more on reading price directly, see the guide to price action trading.

FAQ

How do you draw a trendline correctly?

Connect at least two lows in an uptrend, or two highs in a downtrend, without cutting through any candles. A third touch confirms it, and more touches make it stronger.

How many touches make a valid trendline?

Two touches draw it, and a third makes it worth trusting. The classic books agree that the number of touches matters more than the length of the line.

What is the 3% rule for trendline breaks?

It is Edwards and Magee’s filter: a close beyond the line by about 3% of the stock’s price. John Murphy uses 3% for major lines and 1% for shorter ones, and Martin Pring calls the rule useless on intraday charts.

Should trendlines be drawn on log or linear charts?

Use log scale for long, strong trends covering years. For a few months of data, the scale makes little difference.

How do you trade a trend channel?

Buy near the lower line in an uptrend, use the upper line as a profit target, and be wary of breaks above the upper line, which often fail.

Go deeper

A good line only helps if you check it the same way every day. The free 15-Minute Swing Trader’s Checklist has the daily routine, the questions to ask before every trade, and the five rules that protect your account.

About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.