The peculiarity of metals in comparison with currency pairs is high volatility and susceptibility to fundamental factors. Gold is inversely correlated with the US dollar and is considered a “safe haven” – when currency and stock markets fall, investors’ money flows into gold. On the daily graphs of metals very well drawn levels of resistance and support. Forex gold trading strategy can be based only on candlestick analysis and breakdown of levels. And how to put this into practice, read on.
Forex Gold Trading Strategy
The strategy does not require the constant presence of the trader at the computer. Its essence is to take advantage of volatility, which will help the trend to break through daily levels. It is enough to place a grid of orders at night and periodically check the result by day. Trading is conducted on a timeframe of 24 hours on XAU / USD. No indicators should be added to the chart.
Conditions for opening positions: at 00.00 EST after the candle is closed (the candle is equal to the daily interval) we place two pending orders:
- Buy Stop – the maximum value of the closed daily candle “+ 100 points”;
- Sell Stop – at the minimum value of a closed daily candle “- 100 points.”
If the difference between the maximum and minimum value of a candle is less than 1000 points, then we do not enter the market. If during the day, some order is triggered, the second is not necessary to delete. At the close of the day orders that did not work, we delete. Stop-loss set on the values of opposite orders. That is, for Buy Stop, the stop is placed at the minimum of the candle minus 100 points and vice versa. Exit from the market: a profit of 250 points, after which stops are transferred to the level of breakeven (position opening).
Forex Trading Strategy Tips:
- If the end of the day is 1-2 hours and the price has come close to one of the orders, it is better to remove the order. It is unlikely that the price will have time to bring adequate profit for the remaining time;
- if during the day the profit reaches 1000 points, it’s better to close the position ahead of time, as stops may trigger at high volatility;
- stops work, but rarely. Several losing trades will be closed with one profitable one. To control the price movement is enough for several minutes every 2 hours.
The Forex Gold Trading Strategy will help you better understand the principle of candlestick analysis, which can be supplemented with support and resistance levels. If the currency pairs often have a long fluctuation within the same price range, gold, on the contrary, often breaks through the previous daily ranges. It is on this volatility with the breakdown of levels that we offer to make money. It will be interesting to know your opinion in the comments!