I want to learn the right hand technique used by gypsy guitar, especially that of joscho stephan. His arm is perfectly still but the hand is moving so fast, how is he doing that? Any tips on how to develop such strumming? Specifically, here is a link to a performance where this technique is predominant. When I try moving only my palm, my arm also moves due to the impulse and then starts hurting.
I suspect this may not be the answer you were hoping for, but here it is.
Based on your question, I am going to assume that you are still learning some techniques and that you have not yet reached a level of advanced proficiency at the guitar, and that you are not an otherwise advanced player who is struggling with one specific technique. Please let me know if I'm wrong.
When you master picking, your hand will be relaxed as you see in this video. The tension and pain are from trying to push your body to do something it has not yet mastered. As you master this technique, it will become easier and easier and you will expend less and less energy. And yet the advice to "try less hard" is not very helpful for you right now. But what you can expect as you get these techniques down is that mastery will be marked by ease and relaxation.
You may not be able to "learn" this technique in the sense of using disciplined practice over a short period of time to acquire it. There are multiple picking techniques used, including economy picking, sweep picking, tremolo picking. Each technique could take thousands of hours to develop.
It may take a very long time to get this technique to a level anywhere near this guy. It is useful to set your goals on these targets but it can also be dangerous to use the technique of a world class player as a comparison. I don't mean that you shouldn't draw knowledge and inspiration from great players. For instance, when you say it looks like he's not moving at all, actually he's moving just as much as he needs to but in a very coordinated and fluid way. And although it may be useful to analyze his technique, I think it's much more useful to spend that time practicing it instead.
I believe the answer to your question lies in developing very strong right-hand picking technique by developing all aspects of your right hand picking, an endeavor that many players spend 10 or more years working on. I don't mean to be discouraging, but I remember asking more experienced players "How do I do that?" and then 5 years later I was able to do it. There was no secret. The only magic bullet for developing good technique was many, many hours of practice. This is one of the most frustrating parts of learning an instrument. But when you get to the other side and look back, it's one of the most rewarding.
Keep at it, make sure you are spending plenty of time shedding all different picking habits. Good luck, and practice lots!