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Stop Loss Indices Order

Stop Loss Indices Trading Order Example PDF

Stop Loss Indices Trading Order is a type of order placed after opening a indices trade that is meant to cut losses if the stock indexes trading market moves against you.


Stop Loss Indices Trading Order is a predetermined point of exiting a losing indices trade and it is meant to control losses in stock indexes trading.


A stop loss indices trading order is an order placed with your stock indexes trading broker that will automatically close your open indices trade transaction when the stock indexes price of your open trade order reaches a predetermined indices price. When the set level is reached, your open transaction is liquidated.


These stock indices orders are designed to limit the amount of money that one can lose; by exiting the indices trade transaction if a specific stock indexes price that is against the trade is reached.


For example, a indices trader might open a buy indices trade and put a stop loss of 20 pips, if the stock indexes price moves against the trader by 20 pips the stop loss stock indices order will be filled and the transaction will be liquidated thereby limiting the loss to 20 points (pips) - Stop Loss Indices Trading Order Calculator Indices.


Regardless of what you may be told by other stock indexes traders, there is no question about whether these stop loss stock indices orders should or should not be used - stop loss stock indices orders should always be used.


One of the most difficult things in indices trading is setting these stop loss indices trading orders - Stop Loss Stock Indexes Order - Setting Indices Stop Loss Trading Order Formula. Put the stop loss stock indices order too close to your entry stock indexes price and you are liable to exit the indices trade due to random indices market volatility. Place the stop loss stock indices order too far away and if you are on the wrong side of the indices trend, then a small loss could turn into a large loss.


Critics will point out several disadvantages of these stop loss indices trading orders; that by placing them you are guaranteeing that, should your open indices trade position move in the wrong direction, you will end up selling at lower indices prices, not higher.


The skeptics will also argue that in setting indices stop loss stock indices orders you are vulnerable to exit a indices trade transaction just before the stock indexes trading market moves in your favor. Most indices traders have had the experience of setting a these stop loss stock indices orders and then seeing the stock indexes price retrace to that stop loss indices trading order level, or just below it, and then go in the direction of their original stock indices market trend analysis. What might have been a profitable indices trade position instead turns into a indices trading loss.


Experienced indices traders always use stop loss stock indices orders as they are an important part of the discipline required to succeed in indices trading because stop loss stock indices orders can prevent a small loss from becoming a large loss. What's more, by diligently setting these stop loss stock indices orders whenever you enter a indices trade position, you end up making this important decision at the point in time when you are most objective about what is really happening with the stock indexes trading market, this is because the most objective stock indexes trading technical analysis is done before opening a indices trade transaction. After entering the stock indexes trading market an investor will tend to analyze the stock indexes trading market differently because they have a bias towards one side of the stock indexes trading market, the direction of their stock indexes trading analysis - Setting Indices Stop Loss Trading Order Formula.



Unexpected indices trading economic news can come out of the blue and dramatically affect the trading indices price; this is why it is so important to have a stop loss stock indices order set for your open indices trade. It is best to cut indices trading losses early when a indices trade position is going against you, it is best to cut your indices trading losses immediately rather than waiting for the loss to become a big one. Again, if you set your stop loss stock indices orders when you are entering a trade, then that is when you are most objective as a indices trader - Stop Loss Indices Trading Order.


Stop Loss Indices Order

A key indices question is exactly where to place a this indices stop loss stock indices order. In other words, how far should you place this indices stop loss below your purchase indices price? Many indices traders will tell you to set a predetermined - maximum acceptable loss per indices trade, an amount based on your indices trading account balance rather than use indices technical indicators for calculating where to place the stop loss stock indexes trading order - Setting Indices Stop Loss Trading Order Formula.


Professional money managers advice that you should not lose more than 2% of your indices trading account equity on any one single indices trade transaction. If you have $10,000 in indices trading capital, then that would mean that the maximum loss you should set for any one indices trade transaction is $200 - Stop Loss Indices Trading Order.


If you opened a indices trade then that would mean that you would limit your risk to no more than $200 for that particular indices trade. In that case you would set your stop loss indices trading order at 200 or the equivalent number of pips based on your indices trading position size of the indices trade that you have opened - Stop Loss Indices Trading Order Example PDF - Stop Loss Indices Trading Order Calculator Excel. The topic of indices trading risk management is a wide topic and it is covered under learn indices trading money management topics.





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Stop Loss Indices Trading Order Example PDF

The most important question is how close or how far this stop loss stock indices order should be set from the trading stock indexes price where you entered the indices trade position. Where you set the stop loss stock indices order will depend on several factors:


Since there are no rules set in stone as to where you should set these stop loss stock indices orders on a stock indexes trading chart, we follow general stop loss stock indices order setting guidelines used to help place these indices stop loss indices orders correctly.



Some of the general stop loss stock indices order setting guidelines used are:


1. Risk Percent - How much is a indices trader willing to lose on a single indices trade transaction. The general indices stop loss stock indices order setting rule is that a indices trader should never lose more than 2 percent of the total indices trading account capital on any one single indices trade transaction.


2. Stock Indexes Market Volatility - indices market volatility refers to the daily stock indexes price range movement of the indices instrument that you are trading. If a indices instrument 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 when you open a indices trade. If you do, you will be taken out of the indices trade position by the normal indices market volatility.


3. Indices Trading Risk to Reward Ratio - this is the measure of potential reward to risk calculated before opening a indices trade. If the stock indexes trading market conditions are favorable then it is possible to comfortably give your indices trade more room. However, if the stock indexes trading market is too choppy it then becomes too risky to open a indices trade transaction without a tight stop loss - then don't make the indices trade at all. The indices trading risk to reward ratio is not in your favor and even setting tight stop loss stock indices orders will not guarantee profitable results. It would be wiser to look for a better indices trade position to next time.


4. Indices Trade Position Size - if the indices trade position size opened is too big then even the smallest decimal stock indexes price movement will be fairly large in risk percentage terms. This means that you have to set a tight stop loss for your indices trade which may be taken out more easily. In most cases it's better to adjust to a smaller indices trade position size so as to give your indices trade more space for fluctuation, by setting a reasonable indices stop loss level for this stop loss stock indices order while at the same time reducing the indices trading risk for the indices trade.


5. Indices Trading Account Capital - If your stock indexes trading account is under-capitalized then you will not be able to set your indices stop loss stock indices orders accordingly, because you will have a large amount of money invested in a single indices trade position which will force you to set very tight indices stop loss stock indices orders. If this is the case, you should think seriously about whether you have enough capital to trade Stock Indexes in the first place.


6. Stock Indexes Market Conditions - If the trading stock indexes price is trending upwards, a tight stop may not be necessary. If on the other hand the trading stock indexes price is choppy and has no clear indices market trend direction then you should use a tight stop loss or not open any stock indexes trades at all.


7. Indices Trading Chart Time frame - the bigger the stock indexes chart time frame you use, the bigger the stop loss indices trading order level should be. If you were a scalper indices trader your indices stop loss stock indices orders would be tighter than if you were a indices day trader or a indices swing trader. This is because if you are using longer indices chart time frames and you determine the trading stock indexes price will be move up it does not make sense to set a very tight stop because if the trading stock indexes price swings a little your open stock indices order will be hit.


Stop Loss Indices Order

The method of setting indices stop loss indices trading orders that you choose will greatly depend on what type of indices trader you are. The most commonly used method to determine where to set indices stop loss stock indices orders is - resistance and support levels. These indices trading support and resistance levels give good points for setting these stop loss stock indices orders as they are the most reliable levels to set stop loss stock indices orders, because the support and resistance levels will not be hit many times.


Stop Loss Indices Trading Order Example PDF

The method of how to set these indices stop loss stock indices orders that you choose should also follow the indices stop loss stock indices order setting guidelines above, even if not all these guidelines apply to your indices trading strategy try to implement the guidelines that will apply to your indices trading strategy depending on what type of indices trader you are.

Stop Loss Stock Indexes Order - Setting Indices Stop Loss Trading Order Formula - Stop Loss Indices Trading Order Calculator Stock Indexes - Stop Loss Indices Trading Order Example PDF - Stop Loss Indices Trading Order Calculator Excel

 

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