Methods of Setting Stop Loss XAUUSD Orders in Gold
Traders using a xauusd trading system must have mathematical calculations that reveal where the order must be placed.
A trader can also place a stop-loss order according to the indicators used to set these orders. Certain trading indicators use mathematical equations to calculate where the stop-loss order should be set so as to provide an optimal exit point. These trading 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 mathematical 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 XAUUSD account balance
This is based on the percent of account balance that the trader is willing to risk.
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 that 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 XAUUSD Trading will be determined by this 2% stop loss level.
2. Setting Stop Loss Gold Order using Support and Resistance Levels
Another way of setting stop loss orders is to use supports and resistance levels, on the trading charts.
Given that stop-loss orders tend to congregate at key points, when one of these levels is touched by the gold trading price, others are set off, like dominos. Stop loss orders tend to accumulate just above or below resistance or support levels, respectively.
A resistance or a support level should act like a barrier for gold trading price movement, this is why they are used to set stop-losses, if this barrier is broken the gold trading price movement can go towards the opposite direction of the original xauusd trade, but if this barriers (support & resistance levels) are not broken the gold price will continue moving in the intended direction.
Stop Loss XAUUSD Order level using a resistance zone
Setting order above the resistance
Stop Loss XAUUSD Order level using a support Level
Setting order below the Support Line
3. XAUUSD Trend Lines
A xauusd trend line can be used to set stop losses where the order is set just below the trend line. As long as the 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 trend-line is broken.
Setting order below the trend line
Examples of where to set this order using xauusd trend lines.
