Indicators for Setting Stop losses in Indices Trading

Some indicators are used for setting stop losses taking away the need for stock traders to perform complex calculations on where to place these stop loss stock trade orders.

A systems trader can also place a stop loss order according to these indicators. Some technical indicators use mathematical equations to calculate where the order stop loss order should be set so as to provide an optimal exit. These indicators can be used as the basis for setting stop loss orders. These indicators follow stock trading price action of a trading instrument closely and define the boundaries which the trading prices should move along in. When the price moves outside these boundaries it is therefore best to close the open stock trades because price stops moving in that particular direction.

Some of the Technical indicators that can be used to set stop loss orders are:

Automatic Stop Loss Order and TP Order Indicator

Parabolic SAR is like an Automatic Stop Loss Order and TP Order Indicator used to set a trailing price stop loss

Parabolic SAR provides excellent exit points.

In an upward trend, you should close long trades when the price falls below the Parabolic SAR indicator

In a downward trend, you should close short trade transactions when price rises above the Parabolic SAR.

If you are long then the price is above the parabolic SAR, the SAR will move upward every day, regardless of the direction in which the price is moving. The amount the Parabolic SAR indicator moves up depends on amount that stock trading prices moves.

Automatic Stop Loss Order and TP Order Indicator

Parabolic SAR - Indicator - Automatic Stop Loss Order and TP Order Indicator

Picture of parabolic SAR and how it is used

Indicator for Setting Stop Loss Orders

Bollinger Band indicator use standard deviation as a measure of volatility. Since standard deviation indicator is a measure of volatility, the Bollinger bands are self-adjusting meaning they widen during periods of higher volatility and contract during periods of lower volatility.

Bollinger Band indicator consist of 3 bands designed to encompass the majority of a trading instruments trading price action. The middle band is a basis for the intermediate term trend, typically it's 20 period simple MA, which is also the base for upper & lower bands. The upper band's distance & lower band's distance from the middle band is determined by volatility of price.

Since the Bollinger Band are used to encompass the price action, the bands can be used to set stop loss orders outside the areas of the bands.

Bollinger Bands Indicator - How Do You Analyze Where to Place a Stop Loss Order in Indices Trading?

Bollinger Bands Setting Stop Loss Order Level - Bollinger Bands Technical indicator

Automatic Stop Loss Order and TP Order Indicator

Fibonacci retracement levels provide areas of support and resistance, these can then be used to set stop loss levels.

Fibo Retracement level 61.8% is the most oftenly used level for setting stop losses. A stoploss order should be set just below 61.8% Fibonacci retracement level

The 61.80 % Fibonacci retracement level indicator is used to set these orders since its rarely hit.

Fib Indicator Stop Loss Order Setting at 61.8 % Fibo Retracement Level