Stop Loss Gold Order Strategy Day Trading
Stop Loss XAUUSD Order Market Order
Stop Loss Gold Order is a type of order placed after opening a gold trade that's meant to cut losses if the xauusd market trend moves against you.
Stop Loss Gold Order is a predetermined point of exiting a losing gold trade & it is meant to control losses in gold.
A stop-loss order is an order placed with your gold broker which will automatically close your open gold trade when price of your open trade order reaches a pre-determined xauusd price. When the set level is reached, your open gold trade transaction is liquidated.
These gold orders are designed to limit the amount of money that trader can lose: by exiting the gold trade if a specific xauusd price that's against the trade is reached.
For example, a trader might open a buy gold trade and put a stop loss of 20 pips, if the xauusd price moves against the trader by 20 pips the stop-loss order will be filled and the gold trade will be liquidated thereby limiting the loss to 20 points (pips) - Stop Loss Gold Order Strategy PDF.
Regardless of what you may be told by other xauusd traders, there's no question about whether these stop-loss orders should or should not be used - stop-loss orders should always be used.
One of the most difficult things in gold trading is setting these stop loss orders - Stop Loss Gold Order Placement - Stop Loss Gold Order Strategy Day Trading. Put the stop loss order too close to your entry price & you're liable to exit the gold trade due to random market volatility. Place the stop-loss order too far away and if you're on the wrong side of the gold trend, then a small trading loss could turn into a big trading loss.
Skeptics will point out several disadvantages of these stop-loss orders: that by placing them you're guaranteeing that, should your open gold trade position move in the wrong direction, you will end up selling at lower xauusd prices, not higher.
Skeptics will also argue that in setting stop loss orders you are vulnerable to exit a gold trade just before the gold market moves in your favor. Most traders have had the experience of setting a these stoploss orders and then seeing the xauusd price retrace to that stop loss order level, or just below it, & then go in direction of their original gold market trend analysis. What may have been a profitable gold trade position instead turns into a xauusd trading loss.
Experienced gold traders always use stop loss orders as these trade orders are an important part of discipline required to succeed in gold because stop loss orders can prevent a small loss from becoming a big loss. What's more, by diligently setting these stop-loss orders whenever you enter a gold trade position, you end up making this important decision at the point in time when you are most objective about what is really happening with the gold market, this is because the most objective gold technical analysis is done before opening a gold trade. After entering the gold market a trader will tend to interpret the xauusd market differently because they have a bias toward one side of the xauusd market, the direction of their gold analysis - Stop Loss Gold Order Strategy Day Trading.
Unexpected gold economic news can come out of the blue and dramatically affect the xauusd price: this is why it is so important to have a stop-loss order set for your open gold trade. It is best to cut gold losses early when a gold trade position is going against you, it is better to cut your gold losses immediately rather than waiting for the loss to become a big one. Again, if you set your stoploss orders when you are entering a trade, then that is when you are most objective as a trader - Stop Loss Gold Order Placement.
Stop Loss Gold Order Strategy Day Trading
A key gold question is exactly where to place this stop loss order. In other words, how far should you place this gold stop loss below your purchase xauusd price? Many gold traders will tell you to set a pre-determined - maximum acceptable loss per gold trade, an amount based on your gold account balance rather than use gold technical indicators for calculating where to place the stop-loss order - Stop Loss Gold Order Strategy Day Trading.
Professional money managers advice that you should not lose more than 2% of your gold account equity on any one single gold trade. If you have $10,000 in gold capital, then that would mean the maximum loss you should set for any one gold trade is $200 - Stop Loss Gold Order Placement.
If you opened a gold trade then that would mean you would limit your risk to no more than $200 for that specific gold trade. In which case you would set your stop-loss order at 200 or the equivalent number of pips based on your gold position size of the gold trade that you have opened - Stop Loss Gold Order Market Order - Stop Loss Gold Order. The topic of gold risk management is a wide topic and it is covered under learn xauusd trading money management topics.
- XAUUSD Money Management Introduction - Factors to Consider When Setting Stop Loss Gold Orders
- XAUUSD Money Management Methods - Stop Loss Gold Order Market Order - Stop Loss Gold Order
Factors to Consider When Setting Stop-Loss XAUUSD Orders
Most important question is how close or far this stoploss order should be set from the xauusd price where you entered the gold trade. Where you set the stop-loss order will depend on several factors:
Since there are no rules cast in stone as to where you should place these stoploss orders on a gold chart, we follow general stop loss order setting guidelines used to help place these stoploss orders correctly.
Some of the general stop-loss order setting rules used are:
1. Risk Percent - How much is a trader willing to lose on a single gold trade transaction. The general stop loss order setting rule is that a trader should never lose more than 2 percent of the total gold trading account capital on any one single gold trade transaction.
2. XAUUSD Market Volatility - gold market volatility refers to the daily xauusd price range movement of the gold that you are trading. If a xauusd price routinely moves upward and down in a range of 50 pips or more over the tutorial of the day, then you can't set a tight stop-loss when you open a gold trade. If you do, you'll be taken out of the gold trade position by the normal gold market volatility.
3. Gold Risk to Reward Ratio - this is the measure of potential reward to risk calculated before opening a gold trade. If the gold market conditions are favorable then it is possible to comfortably give your gold trade more room. However, if the xauusd market is too choppy it then becomes too risky to open a gold trade without a tight stop-loss - then do not make the gold trade at all. The gold risk to reward ratio is not in your favor and even setting tight stop loss orders will not guarantee profitable results. It would be wiser to look for a better gold trade position to next time.
4. Gold Trade Position Size - if the gold trade position size opened is too big then even the smallest decimal xauusd price movement will be fairly large in risk percent terms. This means that you have to set a tight stop loss for your gold trade which might be taken out more easily. In most cases it is better to adjust to a smaller gold trade position size so as to give your gold trade more space for fluctuation, by setting a reasonable gold stop-loss level for this stop-loss order while at the same time reducing the gold risk for the xauusd trade.
5. Gold Account Capital - If your xauusd trading account is under- capitalized then you will not be able to set your stop loss orders accordingly, because you will have a big amount of money invested in a single gold trade which will force you to set very tight stop loss orders. If this is case, you should think seriously about whether you've enough capital to trade XAUUSD in the first place.
6. XAUUSD Market Conditions - If the xauusd price is trending upward, a tight stop might not be necessary. If on the other hand the xauusd price is choppy & has no clear gold trend direction then you should use tight stoploss order or not open any xauusd trades at all.
7. XAUUSD Chart Time frame - the bigger the xauusd chart timeframe you use, the bigger the stoploss order level should be. If you were a scalper gold trader your stoploss orders would be tighter than if you were a gold day trader or a gold swing trader. This is because if you're using longer gold chart timeframes & you determine the xauusd price will be move upwards it doesn't make sense to set a very tight stop because if the xauusd price swings a little your open gold order will be hit.
Stop Loss Gold Order Strategy Day Trading
The method of setting stop loss orders that you select will greatly depend on what type of trader you are. The most oftenly used gold strategy to determine where to set stop loss orders is - resistance & support levels. These gold support & resistance levels give good points for setting these stop-loss orders as they are most reliable zones to set stoploss orders, because the support & resistance levels will not be hit many times.
Stop Loss XAUUSD Order Market Order
The method of how to set these stop loss orders that you choose should also follow the stop loss order setting guidelines above, even if not all these guidelines apply to your gold strategy try to implement the guidelines that will apply to your gold strategy depending on what type of trader you are.
Stop Loss Gold Order Placement - Stop Loss Gold Order Strategy Day Trading - StopLoss Gold Order Strategy PDF - Stop Loss Gold Order Market Order - Stop Loss Gold Order
