Trading Gold Choose a Stop Loss Gold Order

How to select you stop loss level the target stop loss should be based on various strategies depending on your type of gold trading method.

The 3 techniques of choosing stoploss levels are:

Strategies & Techniques of Setting Stop Loss Gold Orders in XAUUSD Trading

Traders using a gold 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 indicators used to set these orders. Certain technical indicators use mathematical equations to calculate where the stop loss order should be set so as to provide an exit point. These indicators can be used as basis for setting these orders.

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

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

To set a stop-loss it is better to use one of the following techniques:

1. Percent of Gold trading account balance

This stop-loss setting method is based on percentage of account balance that the trader is willing to risk.

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

Example:

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

• If the trader buys 1 mini contract

  1 pip = $1

  Then setting at 2 %

  2% is $ 200

2. Setting Stop Loss XAUUSD Orders using Support & Resistance Levels

Another way of setting stop loss orders is to use supports and resistance levels, on the xauusd charts.

Given that stop-loss orders tend to congregate at key points, when one of these levels is touched by xauusd price, other gold orders are set off. Stop loss orders tend to accumulate just above or below resistance or support levels, respectively.

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

Stop Loss Gold Order Level Setting using Resistance Level

Setting stoploss order above resistance level

Stop Loss XAUUSD Order Level using Support Level

Setting stop-loss order below the Support Level

3. Gold Trend Lines

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

Setting stoploss order below the trendline

Example of where to set this stop-loss order using Gold trend lines.