Methods of Setting Stop Loss Metal Orders on Metal Trading

Traders using a metals trading system must have mathematical calculations that reveal where the order must be placed.

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

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

Others just use a predetermined percentage of their total trading account balance.

To set a stop loss order it is best to use one of the following methods:

1. Percent of Metals trading account balance

This is based on the percent of account balance that the trader is willing to risk in metal trading.

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

Example:

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

2. Setting Stop Loss Metal Order using Support and Resistance Levels

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

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

A resistance or a support level should act like a barrier for metals price movement, this is why they are used to set stop losses, if this barrier is broken the metals price movement can go towards the opposite direction of the original metals trade, but if this barriers (support & resistance levels) are not broken the metals price will continue heading in the intended direction.

Stop Loss Metals Order level using a resistance zone

Setting order above the resistance

Stop Loss Metals Order level using a support Level

Setting order below the Support Line

3. Metals Trendlines

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

Setting order below the metals trendline

Examples of where to set this order using metals trend lines.