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Forex question What are the rules to follow in order not to encounter force stop out?
avatar justinjones
Question by: JustinJones - 04 Aug 2015, 23:31:33
What are the rules to follow in order not to encounter force stop out?
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Answers (1)
avatar user 6688
Answer by: Phoebe - 04 Aug 2015, 23:42:13

One type of currency market manipulation is commonly known as taking out stops. This activity tends to require the ability to transact in large amounts, as well as fairly deep pockets, so it tends to be the domain of forex large market makers and speculators like major hedge funds. For example, perhaps a large currency market maker is holding a substantial aggregate amount of stop loss orders at a particular level. Alternatively, maybe a very visible and easily recognized chart pattern has very probably led to the accumulation of stop loss orders by technical traders around a certain level in the market. In either case, these situations result in a particular exchange rate level that, when traded, will probably result in a substantial move in the exchange rate for the relevant currency pair. This move would be driven by the execution of the large number of stop loss orders placed at that level.

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