Methods of Setting Stop Loss XAUUSD Orders in Gold Trading

Traders using a XAUUSDtrade system must have mathematical calculations that reveal where their stop loss must be placed.

A XAUUSD trader also can place a stop loss in accordance to the indicators used to set these stop losses. Certain indicators use mathematical calculations to calculate where the stop loss orders should be set so as to provide an ideal exit point when trading Gold. These chart indicators can be used as the basis for setting these stop losses.

Other online Gold traders also place these stoploss order orders according to a predetermined risk : reward ratio. This method of setting these orders depends upon certain mathematical calculations based on Gold chart price moves. For example illustration a ratio of 50 pips stop loss order can be used by a gold trader if the Gold trade has the potential to make 100 pips in profit: this is a risk reward ratio of 2:1. Also, a ratio of 30 pips stop loss order can be used by a gold trader if the trade has potential to earn 90 pips in profit: this is a risk : reward ratio of 3:1

Other traders just use a predetermined % of their total equity trading balance.

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

1. Percentage of equity balance

This method is based on the % of the trading account balance that the gold trader is willing to risk on any one single Gold trade. If a trader is willing to risk 2% of their account balance - then the trader determines how far he will set the stop loss level based on the trade size which he has bought or sold.

Example:

If a trader has a $100,000 account & is willing to risk 2 %

If the online trader buys 5 lots

1 pip = $5 dollars

Then setting at 2 %

2 % is $2,000 dollars

2000 /5 = 400 pips

Stop loss = 400 pips

If the Gold trader buys 10 contracts

1 pip = $10 dollars

Then setting the stop at 2 %

2 % is $2,000

2000 /10 = 200 pips

Stoploss = 200 pips

If the gold trader buys 20 contracts

1 pip = $20

Then setting at 2 %

2 % is $2,000

2000 /20 = 100 pips

Stoploss = 100 pips

2. Setting Stop Loss using Support & Resistance Areas

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

Given that stop losses tend to crowd at key points, when one of these support/resistance zones is tested by the price, other orders are set off, like dominos. Stoploss orders tend to crowd just above or below the resistance/support zones, respectively.

A resistance/support zone should be like a barrier for Gold price movement, this is why the levels are used to set stop loss orders, if this barrier is broken then the Gold price movement can move towards the in the opposite market trend market direction of the original Gold price trend, but if this barriers (support & resistance zones) aren't broken, then the Gold price will continue heading in the intended direction.

StopLoss Setting using a Resistance Area

Methods of Setting XAUUSD Trading Stop Losses in Gold Trading - How to Set Gold Trading Stop Losses

Setting StopLoss Orders above the Resistance Area

Stop Loss Setting using a Support Area

Methods of How to Set XAUUSD Stop Loss Orders in Gold Trading - Setting Gold Trading Stop Losses

Setting StopLoss Orders below the Support Area

3. Setting Stop Losses Using Trend Lines

A trend line can be used to set stop loss orders where the trade order is set just below the trendline on an upwards trend & above the trend-line on a downward trend. As long as the trend line holds then a xauusd trader will be able to continue making profits & the same time placing this stop loss order that will lock his profit once the trendline is broken.

Methods of Setting Gold Stop Loss Orders in XAU USD Trading - XAUUSD Trading Stop Losses Setting

Setting the stop loss order below the Gold price trend line

Explanation of where to set this stop loss order using trendlines in an upward trending Gold market.

Learn More Tutorials and Lessons & Courses:

Trade Forex Trading