Stop Loss Gold Order Setting: Stop Loss Gold Order Percentage Calculator
The most important question about setting your stop loss order is how close or how far the stop loss order should be set from the xauusd price where you entered the position. Where you set this stop loss order depends on several factors:
Since there are no gold rules set in stone as to where you should place your stop loss order, we follow general guidelines used by Gold traders to help them calculate where to place this stop loss order correctly.
Some of the general guidelines used to set stop loss orders are:
1. Percent Risk Per Gold Trade - How much a trader is willing to lose on a single gold trade. The general trader rule is that a trader should never lose more than 2 percent of the total trading account capital on any one single xauusd trade transaction.
2. XAUUSD Market Volatility - this refers to the daily xauusd price range of xauusd price movement. If a xauusd price movement of a xauusd price routinely moves up and down in a range of 50 pips or more over the course of the day, then you cannot set a tight stop loss order. If you do, you may be taken out of the open gold trade position by the normal gold market volatility.
3. Gold Risk to Reward ratio - risk reward ratio this is the measure of potential reward to risk. If the gold market conditions are favorable then it is possible to comfortably give your gold trade more room when setting stop loss orders. However, if the Gold market is too choppy it then becomes too risky to trade gold without a tight stop loss order then do not make the trade at all. The risk to reward ratio is not in your favor and even setting a tight stop loss will not guarantee profitable results. It would be wiser to look for a better gold trading to trade at another time.
4. Gold Position Size - if the gold position size traded is too big then even the smallest decimal xauusd price movement will be fairly large in risk percentage terms. This means that as a trader you have to set a tight stop loss order which may be taken out more easily by the gold trading market. In most cases it's better to adjust to a smaller gold position size in order to give your gold trade more space for fluctuation, by setting a reasonable stop loss while at the same time reducing the risk percent per trade.
5. Gold Trading Capital - If your xauusd trading account is undercapitalized then you will not be able to set your stop loss orders accordingly, because you will have a large amount of your gold capital invested in a single gold trade position which will force you to set tight stop losses. If this is the case, you should start thinking seriously about whether you have enough trading gold capital to trade the gold market in the first place.
6. XAUUSD Market Trend Conditions - If the gold market is trending upwards, a tight stop loss order might not be necessary. If on the other hand the gold market trend is range bound and has no clear direction then you should use a tight stop loss order or not trade at all.
7. XAUUSD Chart Time Frame - the bigger the xauusd chart time frame you trade, the bigger the stop loss level should be. If you were a scalper gold trader then your stop loss orders would be set tighter than if you were a gold day trader or a gold swing trader. This is because if you are a gold swing trader and you determine the xauusd price will move up it does not make sense to set a very tight stop loss order because if the gold market swings a little your tight stop loss order will be hit.
The method of setting a stop loss order that you choose will significantly depend on what type of trader you are. The Method of how to set a stop loss order, that you choose should also follow the above guidelines, and as a trader you should apply these guideline to your Gold Trading Method.
