StopLoss Gold Order Summary: Factors To Remember When Setting

The key to placing stop loss orders in gold trading isn't to set too close or too far & not exactly on the support or resistance zones.

A few pips below the support or above the resistance levels is the best place.

If you're going long (buying a instrument), just look for a nearby support level that is below your trade entry point & set this order about 10 pips to 20 pips below that support level. The example illustrated and explained below show the level where a trader can set their stop loss orders just below the support level on a chart.

Gold Stop Loss Setting Tutorial: How to Determine XAUUSD Stop Loss Levels

Support Level for Putting StopLoss Gold Order Level for Buy Trade

If you are going short (selling a instrument), just look for a nearby resistance level that is above your trade entry point and put this stoploss order about 10 pips to 20 pips above the resistance zone. The example illustrated and explained below show the level where a trader can set their stop loss orders just above the resistance level on a chart.

XAUUSD Trading Stop Loss Setting Tutorial: How to Determine XAUUSD Stop Loss Levels

Resistance Level for Putting Stop Loss Gold Order Level for Sell Trade

You can also use stoploss orders to lock in profits, Not just for Preventing Losses

The advantage of a stop order is that you do not have to monitor the market on a daily basis how the xauusd market is performing. This is especially handy when you're in a situation which prohibits you from watching your open positions for an extended time period, or when you as a trader want to go to sleep after trading the whole day.

The disadvantage is that the xauusd price at which you put these stop orders could be activated by a short term fluctuation in price. The key is picking a stoploss order percent which allows trading price to fluctuate within the day to day range while capping the downwards side risks.

These orders are traditionally thought of as a way to minimize losses thus the name. Another use of these stop loss orders is to lock in profits, in which case it is referred to as a trailing stop loss order.

For a trailing stop order it is put at a % level below ruling market price. This trailing level then shifted as the Gold trade position unfolds. Using a trailing stop loss level allows you to let profits run while at the same time ensures that should the xauusd market turn you will have locked in some of your trading profits.

These orders can also be used to eliminate risk if a trade transaction becomes profitable. If a trade makes some significant gains then the stop loss order can be moved to break-even point, the point at which you opened buy, thence ensuring that even if the Gold trade position goes against you, you will not make any loss, you will break-even on that trade.

Trailing stop orders are used to maximize & protect profit as trading price rises and cap losses when the price falls.

A good example is when you use the parabolic SAR Indicator & keep moving your stop order to the parabolic SAR level.

How to Set Parabolic SAR in Chart

Parabolic SAR for Placing Trailing StopLoss Gold Order in Gold

Another example is where one moves his stop loss order by a certain number of pips after every few hours or after each hour or after every 15 min depending on the chart timeframe which the trader is using.

In the xauusd above example the parabolic SAR Indicator which had a setting of 2 & 0.02 was used as the trailing stop loss for the above chart. The trader would have kept moving the trailing stop loss order level upwards after every SAR was drawn until the time when the Parabolic SAR was hit & the trend reversed.

Conclusion A stop loss order is a simple tool, yet so many traders fail to use it. Whether it's used to cap excessive losses or to lock in the profits, nearly all investing styles can benefit from this trading tool.

Points To Remember When Placing These StopLoss Orders

Here are some key points to remember:

Be careful with the levels where you put these stop loss orders. If gold normally fluctuates 20 points, you do not want to set your stop loss order too close to that range else you'll be taken out by normal price volatility

Stop Loss Gold Orders take the emotion out of a decisions & by setting one you put preset point of exiting a losing position, intended to control losses.

Traders can always use indicators to calculate where to set these zones, or use the concepts of Resistance & Support to decide where to set these stop loss orders. Another good indicator used to put these stop orders is the Bollinger bands indicator where traders use the upper and lower band as the limits of price therefore placing these orders outside the bands.

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StopLoss Gold Order Summary: Factors To Remember When Setting

You can also use stoploss orders to lock in profits, Not just for Preventing Losses

Points To Remember When Placing These StopLoss Orders