Indicators for Setting Stop losses in Gold Trading
Some indicators are used for setting stoploss orders taking away the need for traders to perform complex calculations on where to place these stop loss xauusd gold trade orders.
A gold systems trader also can place a stoploss order in accordance to these technical indicators. Some indicators use mathematical formulas to calculate where the order stop loss should be set so as to provide an optimal exit. These indicators can be used as the basis for setting stop losses. These indicators follow price action of a instrument closely & define the boundaries which the prices should move along in. When the price moves outside these boundaries it's henceforth best to close the open trade positions because price stops heading in that particular direction.
Some of the Trading indicators that can be used to set stop losses are:
Parabolic SAR Indicator
Parabolic SAR is like an Automatic Stop Loss Order and TakeProfit Order Indicator used to set a trailing price stop loss
Parabolic SAR provides excellent exit points.
In an upward trend, you should close long trade positions when the price drops below the Parabolic SAR indicator
In a downward trend, you should close short trade positions when the price rises above the Parabolic SAR.
If you're long then the price is above the SAR, the Parabolic SAR will move upward every day, regardless of direction in which the price is going. The amount the Parabolic SAR indicator moves upwards depends on the amount that prices moves.
Parabolic SAR - Indicator - Automatic Stop Loss Order and TakeProfit Order Indicator
Picture of parabolic SAR and how it's used
Bollinger Band
Bollinger Band indicator use standard deviation as a gauge of the market volatility. Since standard deviation indicator is a gauge of the market volatility, the Bollinger bands are self-adjusting meaning they widen during periods of higher volatility and contract during periods of lower price volatility.
Bollinger Band indicator consist of three bands designed and intended to encompass the majority of a financial instruments price action. The middle band is a basis for the intermediate term trend, typically it's a 20 period simple MA moving average, 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 middle-band is generally 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 losses just outside the levels of the bands.
Bollinger Bands Setting Stop Loss Order Level - Bollinger Band Technical indicator
Fibonacci Retracement Levels Trading Indicator
Fibonacci retracement levels provide levels of support & resistance, these areas can be used to set stoploss levels.
Fibonacci Retracement level 61.80% is the most commonly used level for setting stoploss orders. A stop loss order should be set just below 61.80% fib retracement level
The 61.8 % Fib retracement level indicator is used to set and place these orders since its rarely hit.
Fibonacci Indicator Stop Loss Setting at 61.80 % Retracement Level
Fibonacci retracement level 61.8% - Fib Indicator
Support & Resistance Areas Lines
Support & resistance zones can be used to set stop loss levels where the stop loss orders are set just above or below the support/resistance.
- Buy Trade - Stop Loss set just a couple of pips below the support
Buy Trade - Stop Loss Order set few pips below the support
- Sell Trade - Stop Loss Order set few pips above the resistance
Sell Trade - Stop Loss Order set a few pips above the resistance
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