I don’t mean to start an argument or anything, but the points above on whether retail trader’s stop losses are being hunted by the institutional guys (or the so called big boys) intrigued me, I am new to this whole forex thing and still trying to demo successfully, I am hoping the experienced traders here might be able to clarify something me regarding the stop hunts?
As explained in one of the youtube videos posted above, it made sense to me that large institutions wants to avoid excessive slippage when they enter their positions into the market, hence they stop hunt, and this is all good and well if it is one bank that wants to get into the market. What if multiple institutions all wants to go long at a certain price range, since they can see each other’s orders like they can with retail traders, who can provide or willing to provide this kind of liquidity to large institutions, and will the failure to fill such orders causes a sudden sharp rise / drop in the currency?
If we say on the other hand that stop hunts are a myth, how does the large institutions get away from the slippage problem?
This is a bit unrelated, but thinking of the flash crash last week, please correct me if I am wrong, but even if we have putted stop losses, the trading account can still be wiped even if a stop loss was set (due to slippage). Would a stop order in the opposite direction be a good safeguard, stop loss might not get hit, but surely an order in the opposite direction during such events would be filled at the preset price?