Stop hunting is the art of flushing the losing players out of the market and is very common in the FX market.  Large speculative players such as investment banks, hedge funds and money center banks are largely responsible.  Many FX traders claim that brokers are responsible also, creating price spikes that are short-lived and aimed at taking your money.  You can read more about this by another blogger at http://www.forexforays.com/2006/05/so-whats-stop-hunting-exactly.html

For this reason, you should seriously consider placing your stops at "less crowded and more unusual locations." (Boris Schlossberg) 

In a recent article by Schlossberg, he mentions a strategy to take advantage of stop hunting.  It requires a price chart and 1 indicator.  For example, if the price of the EUR/USD is approaching 1.2800 downward, mark lines 15 pips on each side of 1.2800 at 1.2815 and 1.2785.   This 30 pip area is known as the "trade zone."  1.2800 is used as the stop hunting level since these round numbers are where speculators will try to target stops.  The idea here is to quickly ride the momentum for a quick profit.  If you determine with your indicator of choice which direction momentum is going or which direction the trend is going, you would want to trade in this direction.  For this example, let's say that momentum is down and the price is below a moving average.  You would short the EUR/USD at 1.2815 with at least 2 lots with a stop at 1.2830 and an initial target of 1.2800.  If the price continues down and hits 1.2800, close 1 lot.  Set the target of the second lot at 1.2785.  At this point, you have already made 15 pips so your risk now is 0.  If the price continues down to 1.2785, you have made 30 pips on the second lot and 15 pips on the first for a total profit of 45 pips.  If the price did not continue down to 1.2785 and instead retreated back above 1.2815, you would have neither gained nor lost.  

I'm using the above example because it is actually happening as I write this.  The EUR/USD closed at 1.2837 at 7 am this morning on a 15 minute chart.  The 7:45 am candle would have given you an an entry at 1.2815.  By 9:00 am, your first lot would have closed at a 15 pip profit.  Since then the price has made it to within 8 pips of your second target but is now retreating back to the 1.2815 level.  Most likely, you will be stopped out on your second lot for a total P/L of 0.

You can read the full article at http://www.investopedia.com/articles/forex/06/StopHunting.asp