Below are today’s likely buy and sell stop price locations for the active Comex gold and silver futures markets. The asterisks (**) denote the most critical stop order placement level of the day (or where the greatest concentration of stop orders are likely to be placed that day).
Below is a detailed explanation of stop orders and why it can be beneficial for a trader to know where they are likely to be in advance.
Stop orders defined
Stop orders in trading markets can be used for three purposes: First, to minimize loss on a long or short position (protective stop). Second: To protect a profit from an existing long or short position (protective stop). Third: To open 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. As soon as the stop price is touched, the order is treated as a “market order” and 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, breaching which would significantly change the short-term technical stance of this market.
A good idea of where the buy and sell stops are can give an active trader a better idea of at what price level the buying or selling pressure in that market will intensify.
The main benefit of using protective stops is that before a trade is initiated, you have a pretty good idea of where to exit the trade if it is a losing trade. If the trade turns into a win and profits accrue, you can use “trailing stops” where protective stops are adjusted to lock in a profit should the market turn against your position.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of the author 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 for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and/or damage resulting from the use of this publication.
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