How Do I Interpret Where to Place a Stop Loss XAUUSD Order in Gold?
How to Where to Place a Stop Loss Order in XAUUSD
The most important question is how close or far this stoploss order should be set from the price where you entered the xauusd trade. Where you set the stop-loss will depend on several factors:
Since there aren't any rules cast in stone as to where you should set these stop losses on a chart, we follow general stoploss order setting guide-lines used to help place these gold stop loss orders in the correct way.
Some of general stop loss order setting rules used are:
1. Risk Percent - How much is a trader willing to lose on one gold trade. General stoploss order setting rule is that a trader should never lose more than 2 percent of the total xauusd account capital on any one single gold trade.
2. Market Volatility - market volatility refers to the daily gold price range movement of xauusd 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 xauusd stop loss when you open a xauusd trade. If you do, you'll be taken out of the xauusd trade transaction by normal xauusd market volatility.
3. Risk-Reward Ratio - this is the measure of potential risk to reward calculated before opening a xauusd trade. If the market conditions are favorable then it's possible to comfortably give your gold trade more room. However, if the market is too choppy it then becomes too risky to open a xauusd trade transaction without a tight xauusd stop loss - then don't make the xauusd trade at all. The xauusd risk to reward ratio isn't in your favor & even setting tight stop loss orders will not guarantee profitable xauusd results. It would be wiser to look for a better xauusd trade transaction to next time.
4. Trade Position Size - if the xauusd trade size opened is too big then even the smallest decimal price movement will be fairly big in risk percent terms. This means that you have to set a tight xauusd stop loss for your xauusd trade which may be taken out more easily. In most cases it's better to adjust to a smaller xauusd trade transaction size so as to give your xauusd trade more space for fluctuation, by setting a reasonable xauusd stop loss level for this stop loss order while at same time reducing the xauusd risk for the trade.
5. Account Equity - If your xauusd account is under-capitalized then you'll not be able to set your stop loss orders accordingly, because you'll have a large amount of money invested in a single xauusd trade which will force you to set very tight stoploss orders. If this is the case, you should think seriously about whether you have enough xauusd capital to trade XAUUSD in the first place.
6. Trading Market Trend - If the price is trending up-wards, a tight stop might not be necessary. If on the other hand the price is choppy and has no clear xauusd market trend direction then you should use a tight xauusd stop loss or not open any gold trades at all.
7. Gold Time Frame - the bigger the time frame you use, the bigger the stop loss level should be. If you were a scalper gold trader your stop loss orders would be tighter than if you were a gold day trader or a xauusd swing trader. This is because if you're using longer xauusd chart timeframes & you determine the price will be move up it does not make sense to set a very tight xauusd stop loss because if the price swings a little, your open gold order will be hit.
How Do You Analyze Where to Place a Stop Loss XAUUSD Order in Gold?
The strategy of putting stop loss orders that you choose will depend on what type of trader you are. Most commonly used method to determine where to set stop loss orders is - resistance & support levels. These xauusd support & resistance areas give good points for setting these stop loss orders as they're most reliable levels to set stop loss orders, because the support and resistance levels will not be hit by the price many times.
Trading XAUUSD Place a Stop Loss Order in XAUUSD Trade Market
The method of how to set these stop loss orders that you choose should also follow the stop loss order setting guidelines above, even if not all the guidelines apply to your xauusd strategy try to implement the guide lines that will apply to your xauusd strategy depending on what type of trader you are.
How Do You Interpret in XAUUSD Trade Where to Place a Stop Loss Order in XAUUSD
