# Methods of Setting Stop Loss Indices Trading Orders In Indices Trading

Traders using a indices trading system must have mathematical calculations that reveal where to set stop loss and take profit in indices  trading.

A Indices trader can also place set stop loss and take profit orders according to the indices technical indicators used to set these set stop loss and take profit orders. Certain indices technical indicators use mathematical equations to calculate where the set stop loss and take profit order should be set so as to provide an optimal exit point for stock indexes trades. These indices indicators can be used as the basis for setting these set stop loss and take profit orders.

Other indices traders also place these set stop loss and take profit orders according to a predetermined risk to reward ratio specified in their indices trading strategy. This method of setting stop loss and take profit is dependent upon certain mathematical equations. For example a ratio of 20 pips indices stop loss can be used by a Indices trader if the trade has the potential to make 60 pips in profit; this is a risk reward ratio of 3:1

Other indices traders just use a predetermined risk percentage calculation of their total indices trading account balance.

To set stop loss and take profit in indices trading it is best to use one of the following methods:

## How to Calculate Stop Loss Indices Trading Order and Take Profit Indices Trading Order in Indices Trading

This method is based on the percent of indices trading account balance that the trader is willing to risk and the risk reward ratio.

If a indices trader is willing to risk 2% of account balance then the trader determines how far he will set the stop loss indices trading order level based on the position size that he has bought or sold - the trader also use the risk reward ratio to calculate where to set take profit order for this trade.

Example:

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

1 pip = \$10

Then setting risk at 2%

2% is \$200

Stop loss = \$200

If Stop Loss Indices Trading Order = \$200 then using risk reward 3:1 the take profit will be set at \$600

## How to Calculate Stop Loss Indices Trading Order and Take Profit Indices Trading Order in Indices Trading

Another method to set stop loss and take profit in indices trading is to use supports and resistance levels, on the stock indices charts.

Given that stop loss stock indices orders and take profit orders tend to congregate at key points, when one of these levels is touched by the indices price, others are set off, like dominos. Stop loss orders and take profit orders tend to accumulate just above or below the resistance or support levels, respectively. Traders should use these levels to set stop loss and take profit in indices trading depending on which side of the trade they are in.

A resistance or a support level should act like a barrier for stock indexes price movement, this is why these resistance and support levels are used to set stop losses and take profits, if this stock indexes price barrier is broken the stock indexes price movement can go towards the opposite direction of the original indices trade, but if this barriers (support and resistance levels) are not broken the stock indexes price will continue moving in the intended direction. This means that these support and resistance levels can be used as good points to set stop loss and take profit in stock indexes trading.

Stop Loss Indices Trading Order vs Take Profit Stock Indexes Order - Stop Loss Indices Trading Order Example Sell Order Buy Order - Take Profit Indices Trading Order Example Sell Order Buy Order