Luke Carter

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Why do forex brokers use stop hunting (spikes)?

Stop hunting refers to sudden price spikes that trigger traders’ stop-loss orders. While some spikes are caused by normal market volatility, unethical brokers may manipulate prices on their platform to intentionally hit stops and profit from client losses. This is more common with unregulated or offshore brokers. Legitimate reasons for spikes include low liquidity, high volatility during news releases, and market gaps. To avoid stop hunting, traders should use regulated brokers, compare quotes across platforms, and avoid setting stops too close to obvious price levels.