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Stop Loss Order Setting: Stop Loss Order Percentage Calculator

The most important question about setting your stop loss order is how close or how far the stop loss order should be set from the price where you entered the position. Where you set this stop loss order depends on several factors:

Since there are no xauusd rules set in stone as to where you should place your stop loss order, we follow general rules used by traders to help them calculate where to place this stop loss correctly.

Some of general guidelines used to set stop losses are:

1. Percent Risk Per XAUUSD Trade - How much a trader is willing to lose on a single trade. The general trader 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 - this refers to the daily gold price range of price movement. If a price movement of a instrument 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 order. If you do, you may be taken out of the open trade by normal market volatility.

3. Risk to Reward ratio - risk reward ratio this is the measure of potential reward to risk. If the market conditions are favorable then it is possible to comfortably give your trade more room when setting stop loss orders. However, if the Trading market is too choppy it then becomes too risky to trade without a tight stop loss order then do not make the trade at all. The risk to reward ratio is not in your favor & even setting a tight stop loss will not guarantee profitable results. It would be wiser to search for a better xauusd to trade at another time.

4. Position Size - if the trading position size traded is too big then even the smallest decimal price movement will be fairly big in risk percent terms. This means that as a trader you have to set a tight stop loss order which may be taken out more easily by the trading market. In most cases it's better to adjust to a smaller xauusd position size in order to give your trade more space for fluctuation, by setting a reasonable stop loss while at the same time reducing the risk percent per trade.

5. XAUUSD Capital - If your trading account is undercapitalized then you will not be able to set your stop loss orders accordingly, because you will have a large amount of your capital invested in a single trade position which will force you to set tight stop losses. If this is the case, you should start thinking seriously about whether you have enough xauusd capital to trade the market in the first place.

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6. Trade Market Trend Conditions - If the market is trending upwards, a tight stop loss might not be necessary. If on the other hand the market trend is range bound & has no clear direction then you should use a tight stop loss order or not trade at all.

7. Time Frame - the bigger the chart timeframe you trade, the bigger the stop loss level should be. If you were a scalper trader then your stop loss orders would be set tighter than if you were a day trader or a swing trader. This is because if you are a swing trader and you determine the price will move up it doesn't make sense to set a very tight stop-loss because if the market swings a little your tight stop order will be taken out.

The method of setting a stop loss order that you select will mostly depend on what type of trader you are. The Method of how to set a stop loss order, that you choose should also follow the above guidelines, and as a trader you should apply these guideline to your XAUUSD Method.