Methods of Setting Stop Loss Trading Orders In XAGUSD Trading

Traders using a silver system must have math calculations that reveal where the order must be placed.

A trader can also set a stop loss trading order according to the indicators used to set these orders. Certain indicators use mathematical equations to calculate where the stop loss order should be set so that to provide an exit point. These 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 percent of their total trading account balance.

To set a stop loss order it's best to use one of the following techniques:

1. Percentage of trading account balance

This is based on the percent 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 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 Silver will be determined by this 2% stop loss level.

2. Setting Stop Loss Order using Support & Resistance Areas

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

Given that stop loss trading orders tend to congregate at key points, when one of these levels is touched by the trading price, others are set off, like dominos. Stop losses 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 trading price movement, this is why they are used to set stop losses, if this barrier is broken the trading price movement can go toward the opposite direction of the original trade, but if this barriers (support and resistance levels) are not broken the price will continue heading in the intended direction.

Stop Loss Trading Order level using a resistance level

Setting order above the resistance

Stop Loss Trading Order level using a support Level

Setting order below the Support Line

3. XAGUSD Trend Lines

A 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 trendline is broken.

Setting order below the trend line

Examples of where to set this order using trend lines.