Indicators For Setting Stop losses In Commodities

Some indicators are used for setting stop losses taking away the need for traders to perform complex calculations on where to place these stop loss trade orders.

A trading systems trader can also place a stop loss order according to these indicators. Some commodity indicators use mathematical equations to calculate where the order stop loss order should be set so as to provide an optimal exit. These commodity indicators can be used as the basis for setting stop loss orders. These commodity indicators follow price action of a commodity instrument closely and define the boundaries which the prices should move along in. When the price moves outside these boundaries it is therefore best to close the open trades because price stops moving in that particular direction.

Some of the Technical commodity indicators that can be used to set stop loss orders are:

Parabolic SAR Indicator

Parabolic SAR is like an Automatic Stop Loss Trading Order and TakeProfit Trading Order Indicator used to set a trailing price stop loss

Parabolic SAR provides excellent exit points.

In an upward commodity trend, you should close long trade positions when the price falls below the Parabolic SAR indicator

In a downwards trend, you should close short trade positions when the price rises above the Parabolic SAR.

If you are long then the price is above the parabolic SAR, the SAR will move upward every day, regardless of the direction in which the price is moving. The amount the Parabolic SAR indicator moves up depends on amount that prices moves.

Parabolic SAR - Indicator - Automatic Stop Loss Trading Order and TakeProfit Trading Order Indicator

Picture of parabolic SAR and how it is used

Bollinger Bands Indicator

Bollinger bands indicator use standard deviation as a measure of volatility. Since standard deviation trading indicator is a measure of volatility, the Bollinger bands are self-adjusting meaning they widen during periods of higher volatility and contract during periods of lower volatility.

Bollinger Bands indicator consist of 3 bands designed to encompass the majority of a commodity instruments price action. The middle band is a basis for the intermediate term commodity trend, typically it is a 20 period simple MA, which also serves as a base for the upper band as well as the lower band. Upper band's distance and lower band's distance from the mid-band is usually determined by volatility.

Since these Bollinger bands are used to encompass the price action, the bollinger bands can be used by traders to set stop loss orders just outside the areas of the bands.

Bollinger Band Setting Stop Loss Trading Order Level - Bollinger Bands Technical indicator

Commodities Fibo Retracement Levels Indicator

Fib retracement levels provide areas of support and resistance, these areas can then be used to set stop loss levels.

Commodities Trading Fibonacci Retracement level 61.8 % is the most commonly used level for setting stop losses. A stop loss order should be set just below 61.8% Fibo retracement level

The 61.8 % Fibo retracement level indicator is used to set these orders since its rarely hit.