HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

Secrets of Successful Forex Gold Trading


Most beginners and intermediate traders when choosing financial instruments for trading limit themselves to currency pairs. Today, many Forex brokers offer a wide selection of assets:

It is worth noting that of all the above tools, transactions with currency pairs and cryptocurrencies are the most risky. The fact is that the digital and fiat currency market is decentralized, which makes it difficult to analyze effectively. The key to the evaluating of any tradeable asset is its trading volume. Obtaining accurate information about changes in the mentioned factor is almost impossible when it comes to currencies and cryptocurrencies, since neither large banks nor liquidity providers have such information.

ETFs and stock indices should be considered for long-term investments. With the careful preparation of the investment portfolio, this will make it possible to annually profit at the level of 20-30% of the invested capital. This amount is clearly not enough for beginner traders, because few of them have several million dollars of free funds.

There remain commodities, the potential value of which can be relatively easily predicted based on fundamental factors. Today we will talk about ways to successfully trade gold in the OTC Forex market, namely, working with contracts for the difference in prices of this metal. This article provides all the information for novice traders.

Gold Facts Every Trader Should Know


It is important to know that gold is a fossil and non-renewable precious metal. The reserves of open mines are depleted every year, which leads to a constant increase in the value of this asset in the long term. Gold is also a kind of refuge for investor capital. Economic crises always lead to a massive outflow of capital from securities. Fearing ruin amid stock market crash, investors are transferring funds to more reliable assets, one of which is gold.

Pay attention to the dynamics of the pricing of this metal over the past 20 years:

The steady increase in gold prices can be explained by the annual depreciation of fiat money, in other words, inflation. Regardless of the macroeconomic situation, gold always grows in value in the long run.

Forex Gold Trading Specifics


When working with this precious metal in the OTC market, it is important to understand that 1 standard lot is 100 troy ounces. XAU - a symbol of gold in the Forex market. Brokers provide traders with the opportunity to earn money on the pricing of this asset through transactions on the XAU/USD pair. The graph displays the cost of 1 ounce of metal in US dollars. By the way, at the time of writing this article it is 1510.02 USD, therefore, to buy 1 standard lot without leverage, the trader will need 151 002 USD of their free funds. Brokers provide for a minimum contract amount of 0.01 from the lot, that is, for the start of gold trading you need to have 1,550 USD (including commissions). Leverage comes to the aid of novice traders, the maximum level of which is on average 1:1000, however, working with such a volume of borrowed funds creates serious trading risks. The optimal level of leverage is 1:100, that is, to open a transaction with a volume of 0.01 lots on a pair of XAU/USD, it will be enough to deposit an amount from 20 USD to the account.

When using leverage, it is extremely important to pay attention to the conditions of margin trading. Some companies set Stop Out (forced closing of a transaction with fixing a negative financial result) at the level of 60-70% of the trader's deposit, others - at 20-30%. In addition, do not forget about the rules of money management in financial markets. The risk per transaction should not exceed 5-10%. To follow these standards, you will need to replenish a trading account in the amount of 200 USD.

Attention! A good financial result for a forex trader is a stable income of 10-20% per month. To achieve such results in gold trading, you will only need to consider intraday trading. It is important to remember that the mentioned precious metal is a highly liquid exchange asset, therefore M15 and more will be the optimal timeframe for technical analysis. In shorter periods, market noise predominates.

Mid-term trading on the pair XAU/USD


Through medium-term trading, it is quite possible to profit from 80% to 150% per annum when using leverage. In this case, you will need to pay attention to fundamental factors, namely:

Best Gold Trading Strategies


The easiest way to trade this metal through Forex brokers is to buy a minimum volume and maintain an open position for several months. With a positive swap for long positions, making a profit of 100-120% per annum is almost guaranteed.

This method is definitely not suitable for all traders, because you can earn much more on the pricing of the most liquid precious metal. This will require intraday trading. The use of indicators, candlestick patterns and elements of technical analysis is acceptable, but not as effective as analyzing the XAU/USD chart for correlating assets. For the successful implementation of this strategy, it will be necessary to select a financial instrument with a negative correlation coefficient in relation to XAU/USD. The numerator must have a USD symbol.

Important! For effective trading you will need to use 2 price charts. You can simply open 2 windows in the trading platform, but it is more convenient to monitor price changes using a special correlation indicator - OverLayChart. This is a custom analytical tool, so you will need to download it and install it in the root folder of the terminal yourself, and then restart the platform. OverLayChart is written in MQL4, so its correct operation is possible only in the MetaTrader4 terminal.

After installation, OverLayChart will be displayed in the menu of custom forex indicators. When transferring to the chart, the trader will need to select an asset that will be displayed in the terminal window in addition to the main tool:

Changing other input parameters is not required. The SubSymbol column shows the pair USD/JPY. This means that in addition to the main chart, the USD/JPY chart will also be displayed:

The main advantage of gold over other precious metals, like silver or platinum, for the trader is a slight delay. Pay attention to the screenshot provided. The jump in the USD/JPY pair affected gold quotes, but with a delay of 30 minutes. Similar situations in the OTC market are ongoing. To open an order, it is important to wait for an intensive change in the price of the correlating asset by 80-100 points, wait for the impulse to complete and open a trade in the opposite direction for the XAU/USD pair. Placing safety orders is required! The expiration period should be equal to the period of formation of the signal pulse.

In this situation, an order should be opened after the completion of the growth in the value of USD against JPY. Market entry and exit points are marked in the screenshot.

Pay attention to one more similar example:

The growth of USD/JPY caused a decline in quotations on the pair XAU/USD. The opening and closing points of the order are marked on the image.

Attention! When trading on this strategy, there are two kinds of take profit:

Fixed Take Profit equal to the range of the signal price impulse. Overcoming one of the local levels with a graph of the correlating asset (minimum with an uptrend and maximum with a downtrend).

It is strongly recommended to give preference to the first method. Pay attention once again to the screenshot presented earlier. The breakdown of the local minimum on the USD/JPY pair indicates a fast reversal of the trend on XAU/USD. At this point, you should close the Sell order and consider trading for an increase, however, it is worth noting that with fixing profit on Take Profit, the income would be 47 points more.

There is another way to trade XAU/USD in correlation with USD/JPY, in which the intersection of charts will be a signal to open a transaction. For example:

Please note that after the visual intersection of the charts, a pronounced trend is formed. This can be used in the short and medium terms gold trading on Forex.


Characteristics of the considered strategies:

It is recommended that novice traders gain practical experience by trading virtual funds before applying the considered strategies in practice.

Conclusion


Gold trading in the OTC market is justifiably a worthy alternative to working with such traditional asset as currency pairs. This can be explained by dependence on macroeconomic factors, as well as a belated reaction to market events. The latter fully proves the high efficiency of the considered trading methods. The effectiveness of these strategies can be easily verified independently by studying the history of quotes.

Author: Kate Solano, Forex-Ratings.com

RELATED

Coronavirus COVID-19 pandemic possible scenarios

Epidemiologists at the University of Minnesota continue to do their research on Coronavirus COVID-19. They recently published a report in which they...

Trading Like A CFO - Organizing

Once you've got your trading plan in place, it's time to put it in practice. This is the fun part that got you interested in trading in the first place, so you've...

What Forex Pairs to Trade in 2021: Our Top Picks

The year 2020 is gone, but the problems it has brought upon the world and all of the major Forex markets will linger in 2021 as the COVID-10 pandemic is far from...

Where will the COVID-19 pandemic lead the United States?

Last week, US government debt set a new historical maximum. The milestone of $25 trillion was taken. The situation deteriorated sharply in April 2020 due...

Everything To Know About a Crypto Bear Market

If you have been trading crypto, you certainly have heard the terms “crypto bear market” and “crypto winter.” Ultimately, this is a situation where the market sells off quite drastically...

PAMM Account: Recovery Factor

One of the most important indicators of the reliability of the trading system used in the PAMM-account is the recovery factor. It is this factor that investors...

Basics Of Bitcoin Market Analysis

Many investors who are new to bitcoin don't know much about analysing individual digital currencies, so they can benefit significantly from learning some quick tips...

Should you be shorting Bitcoin in 2022?

Bitcoin skeptics and opponents have criticized crypto since its inception, and its association with dark web dealings didn’t help either. There’s also the issue of extreme volatility...

What New Crypto Coins Are Coming in 2022

The crypto industry has experienced an eventful 2021. The world's largest investment funds are actively investing in various crypto assets...

Deep Dive into the Crypto Lexicon: NGMI vs WAGMI

The world of cryptocurrency is not just about trading and investing; it's also about a culture that has its unique language. Terms like HODL, which is shorthand...

Interest rates: why do they matter so much?

There is nothing new about it. You’ve heard about it. We’ve heard about it. The Federal Reserve, the European Central Bank, the Bank of England, the Bank...

STEPN: Libertex explains what you need to know about the "move-to-earn" crypto trend

STEPN (GMT) is a so-called "move-to-earn" crypto token that was launched back in the summer of 2021. However, the price of STEPN has recently picked up...

How did investors survive the crises of past decades?

The world indexes have never fallen so quickly and strongly before. The financial crisis that has begun is unique for its trigger - it was caused by a virus COVID-19...

Trading Ethereum CFDs: What You Should Know

Ethereum is currently the second-largest digital currency by market capitalisation after Bitcoin. There are several things to keep in mind before diving...

Is Litecoin A Good Investment in 2020?

Following Bitcoin's footsteps, several altcoins came afterward that sought to build upon or improve what the first-ever cryptocurrency set out to do. Others are more...

MultiBank Group: Spot Bitcoin ETFs: Revolutionizing Cryptocurrency Investment Landscape

The emergence of Spot Bitcoin Exchange-Traded Funds (ETFs) marks a transformative phase in cryptocurrency investment. By offering a regulated pathway to Bitcoin's price movements...

What Is Spoofing in Crypto Trading?

Spoofing is a way to attempt to manipulate the market in your favor. If you spend any time trading, you will eventually hear the term “spoofing.” Spoofing is illegal...

USDT vs USDC: Which one is the Better Investment?

When you start trading crypto, you often hear the term “stablecoin.” Furthermore, you will learn that there is more than one out there, but the two biggest ones to consider will be USDT vs USDC...

Regulation of Cryptocurrencies in South Asia

The scalability of financial technologies depends on legal system adaptability. India, with 93 million cryptocurrency owners, ranks first globally. However, India isn't among the top 20 countries for favourable crypto regulations. Establishing a favourable legal regime is crucial for India's financial market development, especially with the middle class projected to reach 90% of the population by 2039.

What is Decentralized Finance, or DeFi?

Decentralized finance, or DeFi, is similar to but not identical to Bitcoin (BTC). The term "DeFi" refers to financial systems enabled by decentralized blockchain technology. DeFi is mostly linked to the Ethereum (ETH) blockchain...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.