Disliked{quote} Everything you said make sense. Your last point, why would Goldman Sachs risk 4.5B just to take out retailers? If retailers say we're to abstain for a day. No patterns of 'stop hunt' will be observable on the charts? So let's say there's a obvious Support level and most of retailers buy EURUSD and their stoploss is below this Support level. Their stoploss simply mean they are offering to buy USD at this particular price. If Goldman Sachs see these USD offers and they do have USDs to sell and are interested to sell them at that offered price...Ignored
I just put Goldman Sach as an example. There are many of them and many have bigger capital, for example
AUM of HSBC: 620Billion
AUM of Prudential: 1.71 Trillion
Fx reserve of US: 130Billion
Fx reserve of HK gov: 500 Billion (It is very high because for holding USD/HKD)
Fx reserve of China: 3.1 Trillion
As joke, they don't even need to use leverage or contracts to trade forex, they can use cash and still able to make volume of 5B pretty easily.
My second hypothesis is the big players' trading actions will leave a footprint, for example the value zones being the actual betting ground between them. The patterns can be interpreted as S/R etc because it is the currency values being decision points. So sometimes they work when retail traders find them
What I think is the big player have incentive to minimize loss while market go where they wish to be, just as retail traders (I don't use PROFIT, because like governments may not profit in the FX transaction but for greater potential revenue in economy as whole, e.g. HKD vs USD). In order to do that they need to chip in capital to create orders. Since liquidity is needed to fill the orders, to BUY, either accept a gradually higher price as order being filled, or a SELL to next value zone before it ("Stop hunt") and able to buy at lower cost. And it is likely to be more apparent a Stop Hunt when the value zones are no longer a betting place and only the retail traders placing their tiny orders.
3