Methods of Setting Stop Loss Energies Trading Orders In Energy

Traders using a energies trading system must have mathematical calculations that reveal where the order must be placed.

A trader can also place a stop-loss order according to the technical indicators used to set these orders. Certain technical indicators use mathematical equations to calculate where the stop loss order should be set so that to provide an optimal exit point. These technical indicators can be used as the basis for setting these orders.

Other traders also place these orders according to a predetermined risk to reward ratio. This method of setting is dependent upon certain math equations. For example a ratio of 50 pips stop loss can be used by a trader if the trade has the potential to make 100 pips in profit; this is a risk reward ratio of 2:1

Others just use a predetermined percentage of their total trading account balance.

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

1. Percent of Energy account balance

This is based on the percent of account balance that the trader is willing to risk when trading.

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

Example:

If a trader has a $100,000 account and is willing to risk 2% then the position size of the trade that they will open for Energies Trading will be determined by this 2% stop loss level.

2. Setting Stop Loss Energies Trading Order using Support & Resistance Levels

Another way of setting stop loss orders is to use supports and resistance regions, on the energy trading charts.

Given that stop loss orders tend to congregate at key points, when one of these levels is touched by the energies price, others are set off, like dominos. Stop loss orders tend to accumulate just above or below the resistance or support levels, respectively.

A resistance or a support level should act like a barrier for energies price movement, this is why they are used to set stop losses, if this barrier is broken the energies price movement can go towards the opposite direction of the original energies trade, but if this barriers (support and resistance levels) are not broken the energies price will continue moving in the intended direction.

Stop Loss Energies Trading Order level using a resistance level

Setting order above the resistance

Stop Loss Energies Trading Order level using a support Level

Setting order below the Support Line

3. Energy Trend Lines

A energies trend line can be used to set stop losses where the order is set just below the trend line. As long as the trend line holds the trader will be able to continue making trading profits while at the same time set this order that will lock his profit once the trend line is broken.

Setting order below the trend line

Examples of where to set this order using energies trend lines.