Posted on 08/22/2013 11:54:15 AM PDT by Sawdring
Below are today’s likely price locations of buy and sell stop orders for the active Comex gold and silver futures markets. The asterisks (**) denote the most critical stop order placement level of the day (or likely where the heaviest concentration of stop orders are placed on this day).
See below a detailed explanation of stop orders and why knowing, beforehand, where they are likely located can be beneficial to a trader.
..........See Graph At Link................
Stop Orders Defined
Stop orders in trading markets can be used for three purposes: One: To minimize a loss on a long or short position (protective stop). 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 touched, the order is treated like a “market order” and will be filled at the best possible price.
Most stop orders are located and placed based upon key technical support or resistance levels on the daily chart, which if breached, would significantly change the near-term technical posture of that market.
Having a good idea, beforehand, where the buy and sell stops are located can give an active trader a better idea regarding at what price level buying or selling pressure will become intensified in that market.
The major advantage of using protective stops is that, before a trade is initiated, you have a pretty good idea of where you will be getting out of the trade if it's a loser. If the trade becomes a winner and profits begin to accrue, you may want to employ "trailing stops," whereby protective stops are adjusted to help lock in a profit should the market turn against your position.
“The major advantage of using protective stops is that, before a trade is initiated, you have a pretty good idea of where you will be getting out of the trade if it’s a loser. “
Stops can be dangerous. For example, you have a stop at 90 on a stock at 100. The next morning it opens on rumor at 50. Your stop sells it at 50. Moments later, rumor is debased and it returns to 90. You just lost big time.
The Flash Crash burned some people as well.
Better question: Where is Germany’s gold that was vaulted in the U.S.? A gift from 0bama to the Muslim Brotherhood?
Interesting
I saw an article here on FR where a guy was robbed of $250,000 in gold if I remember right. As long as the paper market doesn’t get too far ahead of the physical market you don’t have that physical risk.
“Stops can be dangerous. For example, you have a stop at 90 on a stock at 100. The next morning it opens on rumor at 50. Your stop sells it at 50. Moments later, rumor is debased and it returns to 90. You just lost big time.”
Yes indeed. I am of the opinion that stops are low-hanging fruit for large fund managers and high-volume trading firms, a little bit of extra sugar sprinkled on top of mass-short manipulation.
A little bit of market fluctuation coupled with some strategic trading volume to goose the dip a bit further down, and all of a sudden you have automated stops coming up for sale at very nice prices.
Not just stops but any and all orders are manipulated and have been for at least 10 years by HFTrading algorithms to scalp you bigtime ...
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