you are right about the volume, But the volume you are referring to follows the big board in CME floor and like I said, this does not happen often. Specially within recent years as the electronic trading is getting more advanced.
It depends on what you do. If you use an automated strategy with a well defined and stable distribution of returns you might need fixed stoplosses when you enter your trade in order to define your maximum risk (ex. 1% of capital). This then allows you to provide statistical guarantees based on your distribution of returns (ex. 99% confidence no losing month).
Myth. They can see how many waiting buy/sell orders are sitting at each tick. Its not rocket science. So can you. Seriously, paranoia is not a good way to be trading.
I agree about giving a trade time. It's very difficult to get entry timing perfect, which is basically what you're asking for with a hard, tight, initial stop loss. I've heard of other people also placing this "catastrophic" stop loss. While I don't believe there is any harm in this, I don't think it's useful either. Think about the circumstances under which your catastrophic stop loss would be triggered. Likely a major news event, that moves price in one direction very, very quickly. In this type of environment, your stop loss is more than likely to incur significant slippage due to the quick movements. Like I said, no harm done, but I don't see this as being any different from closing the position with a market order as price moves against you. Unless you are not actively watching the trade or something to that effect, in which case I suppose it would be useful.
It's a VERY long read. Literally took months of reading, but was well worth it. Look up the thread "Technical Analysis Fallacy" on forexfactory.com
Good info, guys. Thanks...I didn't think that there was some big conspiracy, just that sometimes weak traders show weakness and their stronger counterparts capitalize on those weaknesses.