In simple terms, although we do not breach accounts that may have had 1 scalping trade due to a triggered S/L or T/P, if we notice that you are setting a S/L or T/P very close to your position entry, this will be considered intentional scalping which is prohibited.
Stop-loss orders are indeed a crucial tool for managing risk in trading, but they can also be subject to manipulation, particularly in highly liquid markets. Placing stop-loss orders at less obvious levels can be a strategy to mitigate the risk of being targeted by manipulative actions such as stop-loss hunting.
When a stop-loss order is executed, it triggers a market order to sell the asset at the prevailing market price. This means that if the price has fallen below the stop-loss level, the order will be executed at the best available price at that moment, potentially resulting in a loss.
Scalping strategies, which involve executing numerous trades over short timeframes, can be particularly vulnerable to stop-loss hunting.
To mitigate the risk of stop-loss hunting, traders can adopt several tactics:
Use less obvious stop-loss levels: Instead of placing stop-loss orders at round numbers or obvious support/resistance levels, consider using technical analysis indicators or Fibonacci retracement levels to identify less conspicuous levels for setting stop-loss orders.
Employ prudent risk management: Ensure that stop-loss levels are set based on a thorough analysis of market conditions and individual risk tolerance. Avoid setting stop-loss orders too close to current market prices, as this increases the likelihood of being triggered by short-term price fluctuations.
Monitor market dynamics: Stay informed about market sentiment, news events, and potential catalysts that could impact price movements. Being aware of potential manipulation tactics can help traders anticipate and respond effectively to changing market conditions.
Diversify trading strategies: Relying solely on scalping strategies can increase vulnerability to stop-loss hunting. Consider diversifying trading approaches to include longer-term positions or alternative trading styles that are less susceptible to short-term price manipulation.
By implementing these strategies and remaining vigilant, traders can reduce the risk of falling victim to stop-loss hunting and improve their overall trading performance. However, it's important to remember that trading always involves risk, and there are no guarantees of avoiding losses entirely.