Where are the stops? Wednesday, July 3, gold and silver

(Kitco Commentary) – Below are the likely buy and sell stop loss positions for the active Comex gold and silver futures markets. The asterisks (**) indicate the most critical stop loss placement level of the day (or likely the level where the highest concentration of stop losses is being 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 to a trader.

Definition of stop orders

Stop orders in the stock market can be used for three purposes: first: to minimize a loss on a long or short position (protective stop). second: to protect a profit on an existing long or short position (protective stop). third: 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, in advance, of where buy and sell stops are located 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 you enter a trade, you have a pretty good idea of ​​where you will exit the trade if it loses. If the trade becomes a winner and profits start to accrue, you can use “trailing stops,” whereby protective stops are adjusted to help you lock in a profit if the market turns against your position.