Based on study on traveling wave fault location method for power grid， an optimal placement method of traveling wave fault location equipment（TWFLE） is proposed. First， several substations in the power grid are selected to install TWFLE according to placement principles. Then initial placement scheme is optimized with simulated annealing method. The effective combination of placement process with optimized process improves the quality of initial TWFLE placement scheme， and minimizes the searching scope of simulated annealing method，so that the solving process is accelerated. Placement analysis and simulation results of an actual power grid shows that proper optimal placement can reduce the number of TWFLE without influence on reliability and accuracy of fault location. So it can save investment effectively.