Stop Loss Energies Trading Order Trading Summary: Points To Remember When Placing

The key to putting stop orders in energies trading is not to put too tight or too far and not exactly on the support or resistance levels.

A few pips below support or above resistance zones is the best place.

If you're going long (buying a energies instrument), just look for a nearby support level which is below your entry point & set this order about 10 pips to 20 pips below that support level. The example illustrated and explained below show the level where a trader can set their stop loss orders just below the support level on a energies chart.

Support Level For Setting StopLoss Energies Trading Order Level For Buy Trade

If you're going short (selling a energies instrument), just look for a nearby resistance level that is above your trade entry point and put this top loss order about 10 pips to 20 pips above that resistance level. The example illustrated and explained below show the level where a trader can set their stop loss orders just above the resistance level on a energies chart.

Resistance Level For Setting Stop Loss Energies Trading Order Level For Sell Trade

You can also use stop loss orders to lock in profits, Not just for Preventing Losses

The advantage of a stop order is that you do not have to monitor the market on a daily basis how the trading market is performing. This is especially handy when you are in a situation which prevents you from watching your transactions for an extended period of time, or when you want to go to relax after trading the whole day.

The disadvantage is that the price at which you set these orders could be activated by a short-term fluctuation in price. The key is picking a stop order percentage that allows energies price to fluctuate within the day to day range while preventing the downside risks.

These orders are traditionally thought of as a way to prevent losses thus the name. Another use of these stop orders is to lock in the profits, in which case it is known as to as a trailing stop loss.

For a trailing stop order it is put at a percent level below the current market energies price. This trailing level then shifted as the trade position unfolds. Using a trailing stop loss level allows you to let profits run while at the same time ensures that should the market turn you'll have locked in some of your profits.

These orders can also be used to eliminate risk if a Energies trade transaction becomes profitable. If a trade position makes some reasonable gains then the stop loss can be moved to break even point, the place at which you opened buy, thereby ensuring that even if the trade position goes against you, you will not make any loss, you will break even on that trade.

Trailing stop energies orders are used to maximize & protect profit as energies price rises and cap losses when the price falls.

A good example is when you use the parabolic SAR Indicator & keep moving your stop order to the parabolic SAR level.

Parabolic SAR Energies Trading Indicator for Setting Trailing StopLoss Energies Trading Order in Energies Trading

Another example is where one moves his stop loss order by a certain number of pips after every few hours or after each hour or after every 15 minutes depending on the Energies Trading chart timeframe that the trader is using.

In the example above the parabolic SAR Indicator which had a setting of 2 & 0.02 was used as the trailing stop loss order for the above chart. The trader would have kept shifting the trailing stop loss level upwards after every SAR was drawn until the time when the Parabolic SAR Indicator was hit & the trend reversed.

Conclusion A stop loss order is a simple tool, yet so many traders fail to use it. Whether it's used to prevent excessive losses or to lock in profits, nearly all trading styles can benefit from this trading tool.

Points To Remember When Placing These Stop Loss Orders

Here are some important points to remember:

• Be careful with the points where you put these stop orders. If a energies instrument normally fluctuates 20 points, you don't want to set your stop order too close to that range else you will be taken out by normal market volatility

• Stop Loss Energies Trading Orders take the emotion out of a trading decisions and by setting one you set a pre determined point of exiting a losing trade, meant to control losses.

• Traders can always use technical indicators to calculate where to set these zones, or use the trading concepts of Resistance & Support to work out where to set these stop loss orders. Another good indicator used to set these stop loss orders is the Bollinger bands where traders use the upper & lower band as the limits of energies price therefore putting these orders outside the bands.