Time and again, gold has proven its security as an investment in the financial world. Nowadays, gold trading forex brokers have made it easier for traders to trade gold through different tools and strategies.
In the forex market, gold has the XAU code and is considered as a currency unit denominated as one troy ounce of the specified metal as opposed to US dollar (USD).
Leveraging traders’ chances by trading forex gold will not only expand their trading portfolio but also add up their possibilities for more profits.
Why trading the Gold is beneficial?
Gold trading is a beneficial investment among traders for the following reasons:
- A number of investors are trading gold and gold trading is still amassing popularity in the financial markets
- A forex gold trading account boosts a trader’s trading portfolio trading a variety of asset classes
- Gold trading experts are of great help to gold traders to help them provide profitable trade outcomes
Buy Gold in the trading months
Truth be told, gold is a seasonal commodity asset. This means that gold has its best months and peak seasons to trade it and earn profits. Tradeproacedemy.com reported that September is the best month to trade gold as this month yields a 1.70% average return between 1980 and 2011.
Next to September, the best two months to trade forex gold are during July and November.
Traders have to avoid trading the precious metal in February, March, and October as these are said to be the worst months for trading gold.
To maximize trading opportunities, traders should take good note of the gold seasonality. Take a glance at the gold seasonality chart for reference.
Use Fibonacci retracement indicator
The Fibonacci retracement locates the areas of support or resistance. The retracement levels are seen as the horizontal lines indicating possible support and resistance levels. Each of these levels can be interpreted through percentages. The percentage shows how much the price has retracted after a move.
This tool is helpful as it can be drawn between any two significant price points (i.e., the high and low), which will create the levels between the two points. Forex gold traders make use of this tool to help them determine when it is beneficial to open and hold trade positions.
Buy at support
The support and resistance levels indicated using the Fibonacci retracement are some of the key elements in the technical analysis aspect of gold trading strategy. These two fundamentals consist of a support level (the floor under trading prices) and the resistance level (the ceiling of the trading prices).
In essence, traders can make the following trade decisions for the retracement levels of the Fibonacci retracement:
- Traders can buy near the 38.2% retracement level partnered with a stop-loss order below the 50% level
- Traders can buy near the 50% level with a stop-loss order below the 61.8% level.
Stop Loss for gold trading
When trading gold, traders should effectively use the stop-loss strategy to manage potential risks. In using stop-loss in trading gold, traders need to consider the market environment, support and resistance level, and other significant factors. Time stop loss is one of the most common options for stop-loss gold trading.
Gold isn’t as shiny as it seems all the time. Likewise, trading gold forex isn’t an all-year-long profitable investment. Given this reality, how can traders earn seasonal profits through gold trading?
Generally, when the prices of gold are not moving, traders must not trade gold. However, an increase in its volatility is an opportune time to trade gold. Traders need to focus on trading based on the trend. They also need to understand that they need to wait for a pullback and a pause in price as the pause is the stimulant to entering trading.
Now, if the price breaks out of the pause, it’s the time to trade.
Although gold is considered to be a safe-haven asset, it also has its downtime, which traders need to know to be able to make sound trading decisions and avoid trade risks and losses. Traders need to be strategic and time-savvy to be successful gold investors employing specific technical analysis tools, including forex gold trading signals and other forex trading gold charts.