Methods of Setting Stop Loss Gold Orders in XAUUSD
Traders using a xauusd trading system must have mathematical calculations that reveal where to set stop loss & take profit in xauusd trading.
A trader can also place set stop loss and take profit orders according to the technical indicators used to set these set stop loss and take profit orders. Certain xauusd technical indicators use mathematical equations to calculate where the set stop loss and take profit order should be set so as to provide an optimal exit point for gold trades. These gold technical indicators can be used as the basis for setting these set stop loss and take profit orders.
Other traders also place these set stop loss and take profit orders according to a predetermined risk to reward ratio specified in their xauusd strategy. This method of setting stop loss and take profit is dependent upon certain mathematical equations. For example a ratio of 20 pips xauusd stop-loss can be used by a trader if the trade has potential to make 60 pips in profit: this is a risk:reward ratio of 3:1
Other traders just use a predetermined risk percent calculation of their total xauusd account balance.
To set stop loss and take profit in xauusd it is best to use one of the following techniques:
1. Percent of Gold Account Balance
This method is based on the percentage of xauusd account balance that the trader is willing to risk and the risk:reward ratio.
If a trader is willing to risk 2% of account balance then the trader decides how far he will set the stop loss order level based on the position size that he has bought or sold - the trader also use the risk reward ratio to calculate where to set take profit order for this trade.
Example:
If a trader has a $10,000 account and is willing to risk 2%
- If the trader buys 1 contract
1 pip = $10
Then setting risk at 2 %
2% is $200
Stop Loss = $200
If Stop Loss XAUUSD Order = $200 then using risk : reward 3:1 the take profit will be set at $600
2. Setting Stop Loss XAUUSD Order using Support and Resistance Levels
Another method to set stop loss & take profit in xauusd is to use supports and resistance levels, on the gold charts.
Given that stop loss orders & take profit orders tend to congregate at key points, when one of these levels is touched by the gold price, others are set off, like dominos. Stop loss orders & take profit orders tend to accumulate just above or below the resistance or support levels, respectively. Traders should use these levels to set stop loss and take profit in xauusd depending on which side of the trade they are in.
A resistance or a support level should act like a barrier for gold price movement, this is why these resistance and support levels are used to set stop losses and take profits, if this gold price barrier is broken the gold 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. This means that these support and resistance levels can be used as good points to set stop loss and take profit in xauusd.
Stop Loss XAUUSD Order vs Take Profit Gold Order - Stop Loss XAUUSD Order Examples Sell Order Buy Order - Take Profit XAUUSD Order Example Sell Order Buy Order
