We have performed Langevin dynamics and Poisson-Nernst-Planck calculations to simulate detection of proteins by genetically engineered alpha-hemolysin channels. In the recent stochastic sensing experiments, one end of a flexible polymer chain is permanently anchored inside the protein channel at a specified location, and the other end undergoes complexation with an analyte. Our simulations, using coarse-grained modeling, reproduce all essential qualitative results of the electrophysiology measurements of stochastic sensing. In addition, the underlying macromolecular mechanisms behind stochastic sensing are revealed in vivid details. The entropic fluctuations of the conformations of the tethered polymer chain dictate crucially the unique signatures of the ionic current trace of the channel and provide design rules for successful stochastic sensing. The origin of strong fluctuations in the ionic current of the channel is found to arise from the obstruction of the entrance at the beta-barrel of the channel by the fluctuating segments of the tether. Silencing of the pore is due to the suppression of conformational fluctuations of the chain, and the permanent blockade of ionic current is due to the threading of the tether through the channel. The onset of silencing and permanent blockade of the channel current cannot necessarily be attributed to the capture of analytes. In order for detection events to be timed accurately, the length and anchoring location of the tether must be tuned appropriately.