FX: Big fish, Small fish

I thought it would be great to create a thread with useful information for all traders who want to find out how the FX markets operate, a one stop center that answers all questions regarding how the big fish and the small fish interact and transact in FX.

All ideas and comments are welcomed, what are your ideas on how the FX market operates and what would you say about the big fish and the small fish? All fish are welcome!

For myself personally there are several theories that I have read regarding trapped traders, stop loss runs and accumulation and distribution, have you heard of these theories and do you think that they are true or a myth? What are your ideas surrounding these theories?

If we are placing trades in the worlds largest markets, the currency markets, for example: EURUSD, then we are dealing with the worlds largest money market, with the most capital involved, billions and trillions in fact. If the banks are the main players, and the players have been around for years, then there must be order. The market cannot therefore be chaos.

If there is order, it is our duty to find out the logic to the order. If we have the worlds largest banks operating in the worlds largest markets, then we must also subscribe to the fact that the sizes of trades are also large. A large tanker in port needs a large amount of time to turn around itself around, if it spun around quickly it would create a tidal wave. It would need time and patience to do so properly without causing a ripple...

Also wouldn't the tanker would need sufficient time to fill up or unload its payload in port, with specific vehicles or equipment to help aid the transfer of the payload to and from its destination?

Hi,
you made a post in another thread regarding Big Banks fixing market...
I am barred from other thread for asking a question.
These 5/10 big market movers work independently of each other so therefore a lot of manipulation theories are blown out of the water,
They do not collude with each other......

trade well...

If for example the SM can and do engineer moves and run stop losses, then are they able to engineer bigger moves such as trends?

We frequently see ranging markets break out and reverse or continue to trend, in the example of a range breakout, once the SM may have contained as many traders inside the range they then can break out in the opposite direction cashing in on the losing traders stop losses as their profits.

Can the SM then decide to reverse the market after filling their short sell orders on the back of the retails shorts who were stopped out and the market then continues down?

Personally, I don't believe so, that would mostly come from actual fundamental players, but here is an interesting study on 'The Cascade Effect' which, yes, can sometimes come from small players or the general heard. https://www.researchgate.net/publica...erbank_Markets
It has been said that the big players can at times sit back until the heard has run its coarse.

In the spot fx retail market, my opinion is yes, this happens all the time, but within the general main trend at play. A small approximate example would be to overlay of the spot price movement and the futures movement on a given day. I often trade the thin portion of the Asian hrs market and those that don't trade during this period miss out on seeing proportional effects of market positions. It can be a blessing and a curse, but a lot can be learnt from it.

The actions at play in the spot fx market throughout any 24hr period are quite complex, I also agree with billytt's reply.

My comments/postings are not to be taken as professional trading advice.