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
Transactions should be opened exclusively through brokers who have the opportunity 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 the expiration time of futures to be ignored.
The easiest way to work is to use trading platforms such as metatrader 4 or metatrader 5 , since they have the necessary functionality.
As a rule, negative news causes an increase in the price of gold, and positive news causes a decrease in the price of the precious metal on world exchanges.
If you do not have sufficient knowledge of technical analysis, then the easiest way to open trades is based on economic news :
As a rule, negative news causes an increase in the price of gold, and positive news causes a decrease in the price of the precious metal on world exchanges.
Gold is rising in price:
- Reduction of discount rates
- Increased inflation
- Growing geopolitical tensions
- Reports of an economic crisis
- Fall in stock indices
- Increased demand for precious metal
Gold becomes cheaper in case of such news:
- Raising discount rates
- Growth of stock indices
- Strengthening the economy
- Stabilization of the geopolitical situation
- Fall in demand or increase in supply
In order not to miss important events, it is advisable to be subscribed to a reputable financial news channel, and after one of the news listed above comes out, all you have to do is determine its impact on the price of gold and open a buy or sell deal.
Gold trading strategies will be more effective if you also control the price of gold.
For several years now, a fairly consistent pattern has been observed in the movement of the price of the precious metal. First there is a sharp jump in price, followed by a correction , which after some time is replaced by a new upward trend.
For example, the last time gold rose in price to $2,616 per 1 troy ounce , after that its price has not yet dropped below $2,600 per ounce.
It is highly likely that a correction will occur soon, which will reduce the price of gold below $2,600. And the next growth will begin after the price rollback ends, then you need to open a buy deal.
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 myself prefer to limit myself to buy transactions only. You can earn much less this way, but at the same time, the risk of large losses is much lower.
The gold trading strategy, no matter how simple it is, still requires training, and only after that it can be used on a large deposit.