Trade Alert: Enter these stop-limit orders now …

Issue #47

Dear Member,

Over the last hour, gold and silver have lost some downside momentum. Though they remain negative in trend, initial support at the $1,305 level in gold and $21.30 in silver is holding.

Therefore, I want you to move from my mental stops that I have been monitoring for you, to an actual in the market stop, but on a stop-limit basis.

A stop-limit order means that if the price is hit, your broker will attempt to fill your order, but only at the specified limit price.

Any stop order is a double-edged sword: With a regular stop, the order becomes a market order. In fast market conditions, one can end with an adverse fill price.

A stop-limit order tries to eliminate the market slippage, but runs the risk that if the price specified cannot be filled — either because the market is moving too quickly or there is not enough volume bid for at that price — then no fill is achieved. If the market bounces back, fine. But if the market continues to fall, greater market slippage can be expected.

Keep in mind that in speculative trading, there are many factors that need to be taken into account. Not just market direction, but also how to get in and out of the market.

Hedge funds, for example, routinely disguise their trading to hide what they are doing. Some even enter sell orders to disguise their buy orders. They do this by entering sell orders, getting everyone to think they will be selling, then quickly cancel that order and instead, immediately buy the security. It’s all legal and part of the strategies one needs to employ.

When you are trading large volume, or are widely followed as I am, this “game of chess” as I like to call it, is also part of the strategies and tactics one needs to use. In the 1980s, for instance, when I was one of the largest gold traders in the world, I had to routinely disguise my trades through various methods.

Go ahead and get the above stop-limit orders in place, and stay tuned.

Best wishes,

Larry