FXCM trader agreement: risk-reducing orders or strategies

One of the common fxcm scam complaints I’ve come across has been by former FXCM customers telling stories about how FXCM did not honor their stop-loss order. I would guess that these people didn’t read item #2 in the FXCM trader agreement. In item #2 FXCM pretty much covers themselves by letting it be known that there will be times when market conditions will prevent them from executing a stop loss or other limit order.

Personally my biggest losses while trading demo have come as a result of not setting stop-losses on my orders. By not forcing the trade to close out at a specified value in order to limit my losses I have received margin calls a few times.  But as it is I could set a stop loss and still get a margin call anyway, although I suspect, or want to think, these occasions are not every day in occurrence.

The thing that has concerned me has been the  reports of stop-hunting. There have been so many complaints about stop hunting scams that I’ve thought it might be wiser to trade without setting stop losses and limits. However, based on my recent understanding, stop-hunting is common and not in any way illegal or even immoral in forex trading. ( I won’t pretend I understand the ins and outs of it.)

Stop Hunting With The Big Players by Boris Schlossberg provides an explanation of how stop-hunting works. Of course Schlossberg is Senior Currency Strategist for FXCM so it might be that his take on stop-hunting is meant more to benefit FXCM; but his explanation at least sheds some light.

I guess the stop-hunting could be some of the “market conditions” that could prevent FXCM from being able to execute a stop loss order. Maybe the victimized had their stop loss order set at a value that was bypassed when the stop hunters zeroed in on their target.

Perhaps that’s what happens when you have a suddenly big price jump. Must be the stop hunters zeroing in on a target….

Question to  self: Are you sure you want to get into forex trading. There’s probably a very good reason it’s warned that forex trading is not suitable for most members of the general public.

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