Stop Loss Example Gold

Stop Loss Order Definition

Stop Loss Order is a type of order which is placed after opening a trade that's meant to minimize losses if the market trend moves against you.

Stop Loss Order is a predetermined point of getting out of a losing trade and it's meant to control losses in xauusd.

A stoploss order is an order set with your online broker which will automatically close your open trade when price of your open trade order reaches a predetermined price. When set level is reached, your open trade transaction is liquidated.

These orders are meant to limit the amount of money which a trader can lose: by exiting the trade if a particular price that's against the trade is reached.

For example, one may open a buy trade and put a stop loss of 20 pips, if the price moves against the trader by 20 pips the stop loss order will be filled and the trade will be liquidated hence limiting the loss to 20 points (pips) - Stop Loss Order Meaning.

Regardless of what you may be told by other traders, there's no question about whether these stop losses should or shouldn't be used - stoploss orders should always be used.

One of more difficult things in XAUUSD is setting these stop loss orders - Stop Loss Definition - Stop Loss Example XAUUSD. Put the stop-loss too close to your entry price & you are liable to exit the trade due to random volatility. Place the stoploss order too far away & if you're on wrong side of the market trend, then a small loss could turn into a large loss.

Skeptics will point out several disadvantages of these stop losses: that by placing them you are guaranteeing that, should your open trade move in the wrong direction, you will end up selling at lower prices, not higher.

Skeptics also will argue that in setting stoploss orders you are vulnerable to exit a trade just before the market moves in your favor. Most traders have had the experience of setting a these stop losses and then seeing the price retrace to that stoploss order level, or just below it, & then go in direction of their original market trend analysis. What may have been a profitable trade transaction instead turns into a gold loss.

Experienced traders always use stop losses as these orders are an important part of the discipline required to succeed in gold because stop loss orders can prevent a small loss from becoming a big loss. What's more, by diligently placing these stoploss orders whenever you enter a trade position, you end up making this important decision at the point in time when you're most objective about what's really happening with market, this is because most objective technical analysis is done before opening a trade transaction. After entering market a trader tends to interpret the market differently because they are biased toward one side of market, the direction of their analysis - Stop Loss Example XAUUSD.

Unexpected economic news can come out of the blue & dramatically affect the price: this is why it's so important to have a stoploss order set for your open trade. It's best to cut losses early when a trade is going against you, it's best to cut your losses immediately rather than waiting for the loss to become a large one. Again, if you set your stop losses when you are entering a trade, then that's when you're most objective as a trader - Stop Loss Definition.

Stop Loss Example XAUUSD

A key xauusd question is exactly where to set this stoploss order. In other words, how far should you set this stoploss below your purchase price? Many traders will tell you to set predetermined - maximum acceptable loss per trade, an amount depending on your equity balance rather than use technical indicators for calculating where to place the stop-loss - Stop Loss Example XAUUSD.

Professional money managers advice that you shouldn't lose more than 2 % of your trading account equity on 1 single trade. If you have $10,000 in capital, then that would mean that the maximum loss you should set for any one trade is $200 - StopLoss Definition.

If you opened a trade then that would mean you'd limit your risk to no more than $200 for that particular trade. In which case you'd set your stop-loss at 200 or the equal number of pips based on your position size of trade that you as a trader have opened - StopLoss Order Meaning - StopLoss Order Management - Money Management. The topic of risk management is a wide topic and it's explained under learn gold equity management tutorials.

• Gold Equity Management Guide - The Parameters to Consider When Placing Stop Loss
• Gold Equity Management Strategies Methods - Stop Loss Order Meaning - StopLoss Order Management - Money Management

StopLoss Order Definition

Most important question is how close or far this stop-loss order should be set from the price where you entered the trade position. Where you set the stop-loss will depend on several factors:

Because there are no guidelines cast in a stone as to where you should put these stoploss orders on a chart, we follow general stoploss order setting guide-lines used to help place these stoploss orders correctly.

Some of general stop-loss setting guide-lines used are:

1. Risk Percentage - How much is a trader willing to lose on one transaction. General stoploss order setting rule is that a trader should never lose more than 2 percent of the total account equity on any 1 single trade.

2. Market Volatility - market volatility refers to the daily gold price range movement of instrument that you're trading. If xauusd routinely moves up and down in a range of 50 pips or more over the course of the trading day, then you cannot set a tight stop loss when you open a trade. If you do, you'll be taken out of the trade transaction by normal market volatility.

3. Risk:Reward Ratio - this is the measure of potential risk : reward calculated before opening a trade transaction. If the market conditions are favorable then it's possible to comfortably give your trade more room. However, if the market is too range bound it then becomes very risky to open a trade without a tight stop loss - then do not make the trade at all. The risk : reward ratio isn't in your favor and even setting tight stoploss orders will not guarantee profitable results. It would be wiser to search for a better trade transaction to next time.

4. Xauusd trade Position Size - if the trading size transacted is too large then even the minimum decimal gold price movement will be fairly big in risk % terms. This means that you have to set a tight stop-loss for your trade which may be taken out more easily. In most cases ##1++it--isit's better to adjust to a smaller ##1++tradetrade--transaction size so as to give your trade more room for fluctuation, by setting a reasonable stop loss level for this stoploss order while at the same time reducing the risk for the trade.

5. Account Capital - If your trading account is under-capitalized then you'll not be able to set your stop losses accordingly, because you will have a large amount of money invested in a single trade position which will force you to set very tight stoploss orders. If this is case, you should think seriously about if you have enough capital to trade Gold in the first place.

6. Market Conditions - If the price is trending upwards, a tight stop might not be necessary. If on the other hand the price is choppy & has no clear trend direction then you should use a tight stoploss or not open any gold trades at all.

7. Timeframe - the bigger the time frame you use, the bigger the stop loss order level should be. If you were a scalper trader your stop losses would be tighter than if you were a day trader or a swing trader. This is because if you're using longer time frames and you determine the price will be move up-ward it doesn't make sense to set a very tight stops because if the price swings a little, your open order will be hit.

StopLoss Example Gold

The technique of setting stop losses that you select will greatly depend on what type of trader you are. Most oftenly used method to determine where to set stop loss orders is - resistance & support levels. These support & resistance zones give good points for setting these stop losses as they are most reliable levels to set stoploss orders, because the support and resistance zones will not be hit many times.

Stop Loss Order Definition

The technique of how to set these stop loss orders that you choose should also follow the stop loss setting guidelines above, even if not all these rules apply to your trading strategy try to implement the guide lines that will apply to your strategy depending on what type of trader you are.

XAUUSD Stop Loss Definition - Stop Loss Example Gold - Stop Loss Order Meaning - StopLoss Order Meaning - StopLoss Order Management - Money Management