Where are the stops? Tuesday July 19, gold and silver
Below are today’s likely price locations of buy and sell stop orders for active Comex gold and silver futures markets. The asterisks (**) indicate the most critical stop order placement level of the day (or possibly where the highest concentration of stop orders are placed that day).
See below for a detailed explanation of stop orders and why knowing, in advance, where they are likely to be can be beneficial for a trader.
Defined stop orders
Stop orders in trading markets can be used for three purposes: First: To minimize a loss on a long or short position (stop loss). Two: To protect a profit on an existing long or short position (protective stop). Three: To initiate a new long or short position. A buy stop order is placed above the market and a sell stop order is placed below the market. Once the stop price is reached, the order is treated as a “market order” and will be executed at the best possible price.
Most stop orders are located and placed based on key technical support or resistance levels on the daily chart, which, if breached, would significantly change the short-term technical position of that market.
Having a good idea, ahead of time, of the location of buy and sell stops can give an active trader a better idea of the price level at which buying or selling pressure will intensify in that market. .
The main advantage of using protective stops is that before a trade is initiated, you have a pretty good idea of where you will exit the trade if it is a loser. If the trade becomes a winner and profits start to accumulate, you may want to use “trailing stops”, in which protective stops are adjusted to help lock in a profit if the market turns against your position.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. This is not a solicitation to trade commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no responsibility for loss and/or damage resulting from the use of this publication.