What is a Good Stop Loss Setting Percent? - What Percent Should You Set Forex Stop Loss at?

Strategies of Setting Stop Loss Orders In Forex Trading

Forex traders using a Forex trading strategy must have mathematical calculations that calculate where the Stop Loss order should be placed.

A trader can also place a stop loss order according to the technical indicators used to set these stop loss orders.

Certain indicators use mathematical equations to calculate where the stop loss orders should be set so as to provide an optimal exit point.

These forex technical indicators can be used as the basis for setting these stop loss forex trade orders.

Forex traders also place these stop loss orders according to a predetermined risk to reward ratio. This technique of setting stop loss orders is dependent upon certain mathematical equations. For example a ratio of 20 pips stop loss can be used by a trader if the trade has the potential to make 40 pips in profit: this is a risk reward ratio of 2:1

Other traders just use a predetermined percentage of their total forex trading account balance.

To set a stop loss order it is better to use one of the following percentage based methods:

Setting Forex Stop Loss based on Percentage of FX Trading Account Balance

This stop loss setting method is based on the percent of forex account balance that the FX trader is willing to risk in FX trading.

If a trader is willing to risk 2% of account balance then the trader decides how far he will set the order level based on the open trade size which he has bought or sold.

Example:

If a trader has a $10,000 trading account & is willing to risk 2 %

• If a trader buys 0.1 contract or 0.1 Standard Lots

  1 pip = $1

  Then setting at 2% - 2% Stop-Loss Setting Percent

  2% is $ 200

  200 /1 = 200 pips

  Stop loss = 200 pips

• If a trader buys 0.5 contracts or 0.5 Standard Lots

  1 pip = $5

  Then setting at 2% - 2% Stop-Loss Setting Percent

  2% is $ 200

  200 /5 = 40 pips

  Stop loss = 40 pips

• If a trader buys 1 contract or 1 Standard Lot

  1 pip = $10

  Then setting stop loss at 2% - 2% Stop Loss Setting Percent

  2% is $ 200

  200 /10 = 20 pips

  Stop loss = 20 pips

How to Set Stop Loss Orders based on the Forex Account Balance Percent Method - What is a good Stop Loss Setting Percentage?