Techniques of Setting Stop-Loss Orders in XAUUSD

Traders using a xauusd tradingtrade system must have mathematical calculations that reveal where the trade order must be placed.

A trader can also place a stop loss order according to the technical indicators used to set these orders. Certain technical indicators use mathematical equations to calculate where the stop loss order should be set so that to provide an exit point. These technical indicators can be used as the basis for setting these orders.

Other traders also place these orders according to a pre-determined risk reward ratio. This technique of setting is dependent upon certain math equations. For example a ratio of 50 pips stop loss can be used by a xauusd trader if the trade has potential to earn 100 pips in profit: this is a risk to reward ratio of 2:1

Others just use a pre-determined percent% of their total trading equity balance.

To set a stop loss it's best to use one of the following methods:

1. Percentage of equity balance

This is based on the percentage% of trading account balance that the trader is willing to risk.

If one is willing to risk 2% of account balance then the trader decides how far he will set the order level based on the trade size that he has bought or sold.

Example:

If a trader has a $100,000 account and is willing to risk 2% then the position size of trade that they will open for Gold will be determined by this 2% stop loss level.

2. Setting Stop Loss Order using Support and Resistance Areas

Another way of setting stop loss orders is to use supports and resistance zones, on the trading charts.

Given that stop loss orders tend to congregate at key points, when one of these levels is tested & touched by the price, others are set off, like dominos. Stop losses tend to accumulate just above or below the resistance or support areas, respectively.

A resistance or support level should be like a barrier for trading price movement, this is why they are used to set stop loss orders, if this barrier is breached the price movement can move towards the opposite trend direction of original trade, but if this barriers (support & resistance zones) are not broken the price will continue heading in intended direction.

Stop Loss level using a resistance zone

Techniques of Setting Stop-Loss Orders Using Trendlines - How Do You Know Where to Place a Stop Loss Order?

Putting order above the resistance

Stop Loss Order level using a support Level

Techniques of Setting Stop-Loss Orders Using Trend Lines - How Do I Set Stop Losses Using Trend Lines?

Placing order below the Support Line

3. Trend-Lines

A gold trend line can be used to set stop losses where the trade order is set just below the trend-line. As long as the trend line holds the trader will be able to continue making profits while at the same time set this order which will lock his profit once the trend-line is broken.

Techniques of Setting Stop-Loss Orders Using Trend Lines - How Do You Add a Stop Loss Order?

Putting order below the trend line

Examples of where to set this order using trend lines.

Learn More Tutorials: