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Best Forex Gold Trading Strategy

Wed Jan 06 2021 14:40
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What makes a simple gold trading strategy the best? Do you know the qualities that make a strategy the best? Well, we are here to talk about this topic. 

Today we will explore the best gold trading strategies that are suitable for both experts and beginners. Some of these strategies are good for all kinds of commodities. But some of them are specially developed for trading gold.  

Do you think that getting the best strategy is enough? Don't you need to know more about it? How to choose the best strategy and how it works? We will try to explain everything to you in-depth. Read this post before you copy the trading strategy of others. Because a strategy good for others may trouble you.  

So never think that copying a strategy will work every time. It works sometimes, but most of the time you need a strategy made for you. So let's find the best gold trading strategy.  

Know Basics Before Choosing A Gold Trading Strategy 

Traders must be familiar with the basics before they choose a gold trading strategy. As a beginner trader, you must acquire basic knowledge. 

This basic knowledge will help you understand gold trading strategies. You will be doing better with the trading strategies. You may face difficulties in gold trading. As traders face when they trade forex currencies.  

How Gold Trading Works? 

Do you know how to trade gold? Here we will tell you how a gold trading account works. A gold trader works differently as compared to a forex trader.  

Types Of Gold Trades 

Following are some common types of mediums used to trade gold. Forex trading platforms also have gold in a few currency pairs. After the forex, the Gold market also has high liquidity and risk. So must use the stop loss feature here. Following are popular gold trades:  

Bullion

In the bullion mode, a trader keeps precious metals in physical form. Gold is also a precious metal, and people keep it in physical form too. 

CFDs

You can use contracts for difference (CFD) if you want to trade gold. Gold Contracts for difference are mostly used for short term trade. Gold CFDs always come with an expiry date.  

Certificates

You may need a different gold trading strategy to trade gold certificates. They are used to take or give ownership of gold. 

ETFs

Brokers provide Gold exchange-traded funds. A trader can buy gold ETFs through a market broker. 

Swaps

Gold swaps are a little bit similar to trading forex. Because it is also known as the over-the-counter market.  

Futures

Gold futures are traded in a similar way other commodity futures are traded.  

Currency Pair 

Gold is traded in the currency trading market against the USD. XAU/USD is one of the major gold currency pairs.  

Gold Trading Strategy - Choosing The Best  

A gold trading strategy is not only about reading charting and analyzing chart patterns. There is something more important to consider while choosing a strategy. 

But it depends upon which you want to choose. Different strategies may be required while trading gold in foreign-exchange.  

#1. Short Term  

Moving-average is the main component to track in this strategy. You can learn how to trade using this strategy very easily. It is also known as gold intraday trading in the online trading segment. 

Keep an eye on the short term moving average and long term moving average. When a short term MA crosses long term moving average, buy gold. Sell gold when the short term average is below the long term.  

#2. Long Term  

In the long term, gold trading strategy yields are considered by the traders. Other technical indicators like the moving average are also tracked in live trading. But yields are the base. Traders buy gold when yields are below 1%. And traders sell gold when yields cross the 2% rate.  

#3. Fundamental Analysis 

In this trading plan gold is traded using the fundamental analysis. As compared to other assets, gold also has some fundamentals along with it. Trading signals are also used to predict the future directions of gold price movements.  

#4. Technical Analysis 

Technical analysis based gold trading strategy is something more in-depth. Here you will be technically analyzing the gold market along with the foreign exchange market. Forex news and other global parameters affect gold rates. So you will be analyzing for technical trading.  

#5. Trend Trading 

Trend trading strategy is used in many financial markets. It is profitable most of the time. But, surely, trend trading is a very simple way to trade any investment instrument. You just have to buy or sell an asset according to the current trend.  

#6. USD Correlation Strategy 

Gold has a direct link with the fx-market. So the gold trading strategies are impacted by the retail forex trading strategies. In a USD correlation strategy, a gold trader trades gold based on the USD price.  

#7. Global Economy Strategy 

In this strategy, you will be using trading software to analyze different market segments around the globe. Whether it is spread betting or crude oil prices. Global economic trends will be tracked and followed in this gold trading strategy.  

Understand Gold Market Influencers 

Before you enter new trading systems, try to understand the gold financial-market. Beginners should know the factors that influence gold prices.  

Supply And Demand 

Supply and demand rates of gold always affect the gold trading system. Price action that you will take is also impacted by it.  

Geopolitics 

Central banks and industries take actions according to market sentiment. They buy or sell in any situation, whether it is bullish or bearish. So always follow market commentary to see what is going on in the gold trading market.  

Market Volatility 

Market volatility impacts gold trading most. As a consequence, it will affect your gold trading strategy also. So always keep track of volatility before you go to invest your money in the gold trading market.  

Country Reserves 

Central bank reserves or national reserves always impact the gold industry. All the countries reserve gold in their central banks. A central-bank makes policies for the nations. 

So directly and indirectly it is impacting the economy and the gold market. Always try to keep an eye on the central-banks reserve and policies. 

Try to change your gold trading strategy according to the central bank policies. Maybe transaction costs or trading commissions will increase or decrease with reserve policies. So check reserve policies regularly. 

Recession 

A global or domestic economic recession can also influence gold trading. One should be aware of it. As you can see, during the pandemic, there was a huge change in gold prices. 

Gold prices hiked because most of the traders find it as the safest instrument. So always check that what changes your gold trading strategy requires during a recession.  

Summary - Gold trading strategies 

You can try any of the above-mentioned gold trading strategies. All of these strategies are proved and popular. Many traders are already using these strategies. To figure out which is the best for you, start comparing and analyzing. Compare these strategies with your trading portfolio.  
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