Techniques of Setting Stop-Loss Orders in XAU USD Trading

Traders using a xauusdtrade system must have mathematical calculations that reveal where to set stop loss & take profit in gold trading.

A trader can also place set stop loss & takeprofits in accordance to the technical indicators used to set these set stop loss order and tp orders. Certain indicators use math formulas and equations to calculate where the set stop loss and take profit order should be set so that to provide an ideal market exit point for trade transactions. These technical indicators can be used as the basis for setting these set stop loss and take profit orders.

Other traders also place these set stop loss and tp orders according to a pre-determined risk reward ratio specified in their strategy. This method of setting stop loss and tp order depends upon certain math formulas and equations. For example illustration, a ratio of 20 pips gold stop loss can be used by a trader if the Gold trade has potential to make 60 pips in profit: this is a risk:reward ratio of 3:1

Other traders just use a predetermined risk % calculation of their total equity balance.

To set stop loss and take profit in gold trading it's better for you as a trader to use one of the following methods:

1. % of Trade Account Balance

This technique is based on the % of account balance that the trader is willing to risk and the risk : reward ratio.

If a trader is willing to risk 2 percent of account balance then the trader decides how far he will set the stop loss order level based on the position size that he has bought or sold - the trader also use the risk reward ratio to calculate where to set take profit order for this trade.

Example:

If a trader has a $10,000 account and is willing to risk 2%

• If the trader buys 1 contract

  1 pip = $10

  Then setting risk at 2%

  2 % is $200 dollars

  Stop Loss Order = $200 dollars

  If Stop Loss Order = $200 then using risk:reward 3:1 the take profit will be set at $600

2. Setting Stop Loss Order using Support and Resistance Areas

Another technique to set stop loss & take profit in gold trading is to use supports and resistance zones, on the charts.

Given that stop loss orders & tp orders tend to accumulate at key points, when one of these technical levels is tested and touched by price, the others are set off, like dominos. Stop Loss orders & take profit orders tend to congregate just above or below the resistance/support levels, respectively. Traders should use these levels to set stop loss and take profit in gold depending on which side of the trade they are in.

A resistance/support level should be like a barrier for price movement, this is why these resistance and support areas are used to set stop losses & take profits, if this price barrier is breached and broken price movement can move towards the in the opposite direction of initial trade, but if this barriers (support and resistance areas) aren't broken the market will continue heading in the intended direction. This means these support and resistance zones can be used as good points to set stop loss order & take profit in xauusd.

Stop Loss vs Take-Profit Order - Stop Loss Examples Sell Order Buy Order - TakeProfit Order Example Sell Order Buy Order

Learn More Tutorials & Courses:

• Stochastic Indiicator Technical XAU USD Indicator Strategy
• Learn Getting Started in Gold Lesson
• How Do I Open Live XAUUSD Account?
• Islamic XAU/USD Account
• Setting a Schedule
• What are XAU USD Chart Trade Patterns?