Question 1

How do I set the right stop loss for GBP/USD?

Accepted Answer

The right stop loss for GBP/USD depends on market structure, volatility, and your trading strategy. Technical approaches place stops below support for longs or above resistance for shorts. Volatility-based methods use ATR (Average True Range) to set stops 1.5-2x ATR away. The key is placing stops where the trade idea is invalidated, not where loss feels comfortable.

Question 2

What is the difference between stop loss and take profit?

Accepted Answer

Stop loss is the price level where you exit a losing GBP/USD trade to limit losses, while take profit is where you exit a winning trade to secure gains. Both are essential for disciplined trading. Stop loss protects capital; take profit locks in profits. Together, they define your risk-reward ratio before entering any trade.

Question 3

Should I use fixed pips or percentage-based stop loss for GBP/USD?

Accepted Answer

For GBP/USD, using market-based stops (support/resistance, ATR) is generally better than fixed pips. A 50-pip stop might be appropriate in low volatility but too tight during high volatility. Percentage-based stops relative to ATR adapt to market conditions. However, always ensure your stop loss combined with position size keeps dollar risk within your predetermined limits.

Question 4

How does stop loss affect position size in GBP/USD?

Accepted Answer

Stop loss distance directly determines your maximum position size. With a fixed dollar risk of $100, a 20-pip stop allows larger position size than a 50-pip stop. For GBP/USD: Position Size = Risk Amount / (Stop Loss Pips × Pip Value). A tighter stop means larger positions but higher chance of being stopped out; wider stops mean smaller positions but more room for price movement.

GBP/USD Stop Loss & Take Profit Calculator

Frequently Asked Questions

Related Tools

More GBP/USD calculators:

Try other pairs: