Time and again, gold has proven itself as an investment in the financial world. Nowadays, Forex brokers for gold trading have made it much easier for traders to trade gold through various tools and strategies.
In the Forex market, gold has the XAU code and is considered a currency unit, which is referred to as a fine ounce of the specified metal against US dollars (USD).
Taking advantage of the opportunity by trading Forex gold will not only expand your trading portfolio, but also increase your opportunities for more profits.
Why is trading gold beneficial?
Gold trading is considered an advantageous investment among traders for the following reasons:
- A number of investors are trading in gold, and gold trading is still growing in popularity in financial markets.
- A gold trading account at Forex enhances the trading portfolio of a trader who trades in a variety of asset classes.
- Gold trading experts are instrumental in helping gold traders achieve profitable trading results.
Buy gold in the trading months
Honestly, gold is a seasonal commodity. This means that gold has its best months and peak times to trade and earn profits. Tradeproacedemy.com reports that September is the best month to trade in gold, as this month yields an average return of 1.70% between 1980 and 2011.
In addition to September, July and November are the best two months to trade gold at Forex.
Tragers must avoid trading the precious metal in February, March and October, as these are the worst months for trading in gold.
To maximize trading opportunities, traders should take good note of the gold seasonality. Take a look at the gold seasonality table as a reference.
Use the Fibonacci retracement indicator
The Fibonacci retracement indicator locates the areas of support or resistance. The retracement levels are considered horizontal lines that indicate possible support and resistance levels. Each of these levels can be interpreted by percentages. The percentage shows how much the price has retreated after a move.
This tool is useful because it can be dragged between two important price points (namely the highs and the lows), which creates the levels between the two points. Forex gold traders use this tool to determine when it is advantageous to open and hold trading positions.
Buy with support
The support and resistance levels indicated by the Fibonacci retracement are some of the key elements in the technical analysis of the gold trading strategy. These two fundamentals consist of support (the ground below trade prices) and resistance (the ceiling of trade prices).
Essentially, traders can make the following trading decisions to track the Fibonacci number:
- Traders can buy around 38.2% retracement level along with a stop loss order below the 50% level
- Dealers can use approx. Buy 50% level with a stop loss order below the 61.8% level.
Stop loss for gold trading
In gold trading, traders should effectively apply the stop loss strategy to manage potential risks. When using stop loss in trading gold, traders need to consider the market environment, support and resistance, and other important factors. Time stop loss is one of the most common options for stop loss gold trading.
Gold is not as shiny as it may seem all the time. Likewise, trading gold at Forex is not a year-round profitable investment. Given this reality, how can traders earn seasonal profits through gold trading?
In general, if the gold prices do not move, traders are not allowed to trade with the gold. However, an increase in its volatility is a good time to trade in gold. Traders need to focus on trading based on the trend. You also need to understand that you have to expect a pullback and a price break, as the break is the stimulant for entering the trade.
And so when the price comes out of the break, it's time to act.
Although gold is considered a "safe haven," it also has its downtime, which traders should know to make correct trading decisions and avoid trading risks and losses. Traders need to think strategically and time-savingly to become successful gold investors who use special technical analysis tools, including trading signals and other gold charts that are relevant to Forex gold.