Gold trading strategy for a beginner on the stock exchange
Today, there are simply a huge number of gold trading strategies, but almost all of them have one big drawback - the difficulty of using them for a novice investor.
Not long ago, a friend of mine turned to me for advice; he wanted to know how to make money trading gold, and what strategy is best to use?
Moreover, we were not talking about the banal investment of money in gold bars for an indefinite period, but about earning money over a short period of time.
The difficulty in answering the question was that my friend had never been involved in stock trading.
Technical aspects of gold trading strategy
Trades should be opened exclusively through brokers who have the ability to trade such an asset as XAU/USD, that is, gold/US dollar - Brokers for trading gold and silver
It is important that trading is carried out using contracts for difference (CFDs), as this will allow one to ignore the expiration time of futures.
For work, it is easiest to use trading platforms such as Metatrader 4 or Metatrader 5 , since they have the necessary functionality.
The essence of gold trading strategy
If you don't have sufficient knowledge of technical analysis, then the easiest way to open trades is based on economic news :
As a rule, negative news causes the price of gold to rise, while positive news causes the price of the precious metal to fall on global exchanges.
Gold is rising in price:
- Reduction of interest rates
- Increased inflation
- Growing geopolitical tensions
- Reports of economic crisis
- Fall of stock indices
- Increased demand for precious metals
Gold falls in price when news like this comes out:
- Raising interest rates
- Growth of stock indices
- Strengthening the economy
- Stabilization of the geopolitical situation
- Fall in demand or increase in supply
To avoid missing important events, it's advisable to subscribe to a reputable financial news channel. Once one of the above news items is released, you can determine its impact on the price of gold and open a buy or sell trade.
A gold trading strategy will be more effective if you also monitor the price of gold.
For several years now, a fairly consistent pattern has been observed in the price of precious metals. First, there's a sharp price spike, followed by a correction , which after a while gives way to a new upward trend.
For example, the last time gold rose in price to $2,616 per troy ounce , after which its price has not dropped below $2,600 per ounce.
It's highly likely that a correction will soon occur, pushing gold prices below $2,600. The next rally will begin after the price pullback ends, at which point a buy trade should be initiated.
In order to understand this pattern and learn how to apply it in practice, it is advisable to open several gold transactions on a cent account .
You can trade gold in both directions, but I personally prefer to limit myself to long trades. The potential profits are much lower this way, but the risk of large losses is also significantly lower.
A gold trading strategy, no matter how simple, still requires practice before it can be used on a large deposit.
