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

The key to placing top loss orders in gold trading isn't to set too close or too far & not exactly on the support or resistance areas.

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

If you are going long (buying a gold trading instrument), just look for a nearby support level that is below your trade 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 chart.

Support Level for Putting StopLoss Gold Order Level for Buy Trade

If you are going short (selling a gold trading 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 chart.

Resistance Level for Putting Stop Loss Gold Order Level for Sell Trade

You can also use stoploss 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 xauusd market is performing. This is especially handy when you are in a situation which prevents you from watching your positions for an extended period of time, or when you want to go to sleep after trading the whole day.

The disadvantage is that the xauusd trading price at which you put these stop orders could be activated by a short term fluctuation in trading price. The key is picking a stop loss order percent which allows trading price to fluctuate within the day to day range while capping the down side risks.

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

For a trailing stop order it is put at a percent level below the current market trading 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 xauusd market turn you'll have locked in some of your trading profits.

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

Trailing stop orders are used to maximize & protect profit as trading 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 Indicator for Placing Trailing Stop Loss Gold Order in Gold

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 min depending on the Gold chart time frame which the trader is using.

In the xauusd trading example above the parabolic SAR Indicator which had a setting of 2 & 0.02 was used as the trailing stop loss for the above chart. The trader would have kept moving the trailing stop loss order 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 cap excessive losses or to lock in the profits, nearly all investing styles can benefit from this 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 gold 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 Gold Orders take the emotion out of a trading decisions & by setting one you put preset point of exiting a losing trade position, intended to control losses.

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