Use of STOP LOSS on ECBOT/COMEX

Discussion in 'Commodity Futures' started by Realist, Mar 30, 2007.

  1. Realist

    Realist

    It appears that every couple of weeks we hear about traders getting zapped with large losses because their gold position was stopped out far below or above their activation price. All I can say is using any type of stop loss orders for the metals can be extremely hazardous to your account. The running of stops is likely the cause of this however, there are times when large buy/sell orders end up taking out several lines in the exchange book which creates a very disturbing order imbalance to the 9th degree even if only for a few seconds. The exchanges do not seem to have a very good market making system for the electronic metals as of yet. We seem to hear about this issue occuring more often on ECBOT with the YG mini gold contract however it does occur on the full sized ZG as well. I have yet to see these instances occur with COMEX GC on GLOBEX however I have seen prices move very quickly when large sizes are filled. In any case, be forwarned that the exchanges will not bust these trades. You as a trader much be aware of these risks. Utilize stop loss orders in the electronic metals at your own risk!
     
  2. Think this same thing happens on the ecbot silver contracts.

    Think I'm going to stick to comex for now on, and, as you suggest, not use stops. Unfortunately, this means only keeping positions open when I feel confident I can monitor them.

    Or, as you said, maybe the fullsized gold comex contract has large enuf volume protect one against this kind of nonsense.
     
  3. this "nonsense" has happened in GC and SI too
    but to a lessor degree