facebook banner
logotype
Back to list

Best Gold Trading Strategies

5:48 AM Mar 13, 2020
600
Forex trading

Back to our gold rush! Today we will continue to talk about the XAUUSD pair and finally find out what strategy you can use in trading.

In order to choose the best way to trade you need to understand how exactly the pair behaves in the market. If you look at the chart with any timeframe you will notice strong intraday fluctuations within a range. This is due to the low liquidity of the instrument and this will eventually form the basis of our trading strategy.

So what should you look for? Let's take the chart with the H1 timeframe as a basis. Look for a sharp growth and then a reversal of quotes. This is your chance to trade against the trend. To confirm the signal, look for a candle with a long tail and open a trade in the opposite direction. Another confirmation of the transaction should be a false breakout of the sideways range by the tail of the candle.

Next, you need to decide on key price levels:

  • Set Stop Loss around ​​the tail of the candle that has made a false breakout.
  • Take Profit is set, as a rule, after ​​the next 2-3 candles that outline the maximum range of the local trend.

Range Breakout Strategy

Since gold often impulsively moves in the sideways range, the main method of trading this instrument is using the breakout strategy. This method is most suitable for impulse traders with quite a lot of trading experience. You see, the strategy is based on the correct determination of the upper and lower borders of the flat range and the setting of pending orders in these areas. Usually, only more advanced traders are capable of such manipulations.

For this strategy, the main levels are set as follows:

  • Stop Loss is placed right above or below the border of the range opposite from the entry point of the trade.
  • Take Profit is set under or above the entry point in the direction of the trade at a distance equal to the width of the set flat range.

A Few Additional Tips

In the previous article, we already mentioned that the optimal time for gold trading is the interval between 12:00 and 17:00 GMT. Always remember that while trading.

If you want to use the classic gold trend trading strategies, then use the charts with a timeframe of at least D1 since day candles form the main trend of XAUUSD. Remember, however, that the fluctuations in this instrument are much higher than on other currency pairs. If you don’t want your trades to endlessly close by Stop Loss, set the levels much further. To facilitate the process, you can use the Average True Range (ATR) indicator. It will show you the perfect place to set your Stop Loss.

Also, remember about the fluctuations if you use level trading. For the XAUUSD pair, levels are more of pretty wide ranges which differs from other currency pairs.

The Analogue of the “London Explosion”

One of the easiest but very effective ways to make money on gold is to use the strategy of the “London explosion”. Or better say the “American Golden Explosion”. Taking into account the periods of the highest and lowest activity of gold, you can use the breakout strategy even without special skills. We will use the H1 chart.

The main steps of the strategy:

  1. Find the flat range of price movement in the interval from 11:00 to 11:30 GMT. Take it as a basis for determining the main price levels.
  2. Open Sell Stop and Buy Stop pending orders in both directions below and above the established flat range.
  3. The Stop Loss level is set on the border of the flat range, opposite from the entry point of the transaction.
  4. Take Profit is set at a distance of the width of the established flat range.
  5. Around 12:00 GMT, when the volatility on the chart rises, one of your pending orders will be executed. This may happen a little earlier or later. Do not panic.
  6. Wait for the closing of your transaction by Stop Loss or Take Profit.
  7. If at 17:00 GMT your position is still open, close it regardless of its results.

Obviously, these instructions are not a clear call to action. You can make adjustments to it based on your trading plan. The main thing is to take into account the main features of gold behavior before making any changes.

To Summarize

The XAUUSD pair is significantly different from trading in other currency pairs. If you want to succeed, then you need to consider all the features of this instrument.

When choosing gold, remember the main points:

  • The periods of the highest activity of the pair during the day and week
  • Correlation with Chinese yuan, platinum, and silver
  • Impact of the major US economic news
  • Fast execution of Stop Losses due to impulsive behavior of quotes

This concludes our Gold Trading Series. I hope that you will find here answers for all your questions and start to get real profit on the XAUUSD pair.

Popular articles

Stay tuned for the latest FXCL stories

trading mindset beginners novice traders trading strategy forex trading trading plan broker losses forex mistakes trading habits women in Forex female traders risk management profit trading instruments pairs price advantages of forex leverage FXCL investments copy trading advantages of Forex social trading professional traders trading psychology demo trading buy/sell bid/ask spread Metatrader 4 market analysis technical analysis fundamental analysis trade trading platform Forex trading novice trading dealing with losses charts timeframe indicators MetaTrader 4 trading routine support level resistance level trend low-hanging fruit stop loss loss trading history long-term goals open trade close trade daily charts swing trading intraday trading scalping trading setup Forex traders bullish bearish resistance support MA 200 trend trading professional trading EMA EA daily chart weekly chart Forex news highs lows account type cent trading Mini Micro Cent Partnership commission fees trading terms Stop Loss news trading economical calendar major news release currency pair currency rate national currency trading journal trades profit/loss emotions news release positions size Expert Advisors platform trading robot cryptocurrency volatility day trading position size lot account types cent accounts Mini account ECN Copytrade ECN accounts swap-free minimum deposit order execution liquidity providers demo accounts real account low-risk trading EUR/USD economic calendar majors cross-currencies exotic currencies base currency quote currency quotes bid ask Brexit United Kingdom European Union GBP Euro GDP WTO price levels moving average 4-hour chart 1-hour chart bulls bears false breakout cross-currency USD price action pin bar trading inside bar trading hands off breakeven stop loss 50% stop loss pin bar high-frequency trading position trading swings breakout strategy trading style Entry order Take Profit hammer shooting star inside bar pinocchio bar head and shoulders harami risk to reward ratio trading calculator trader’s age emotion control stop-hunting false signal trading session New York session Asian session non-farm payrolls fed rates decision central banks mentor teacher Forex education Forex books candlesticks bonuses tradable bonus no deposit bonus deposit bonus cashback pending orders counter-trend trading risk-to-reward ratio 1-2% rule uptrend downtrend news releases slippage emotional trading stop orders limits orders trailing Stop correlation Correlation Matrix EURUSD EURJPY RSI Overbought/Oversold indicator doji morning start candlestick pattern liquidity London session gap requote US dollar greed excessive trading Expert Advisor trading instrument Twitter Trump euro canadian dollar japanese yen mexian peso currency pairs Fed China economic news currency wars USA interest rates trade agreement H1 H4 D1 sell trade buy trade price level trading system checklist Default mode network Nonfarm Payrolls intraday traders lot size Stop Out margin breakeven pip point entry price chart candles weekly candle daily candle engulfing candle Doji W1 Coronavirus epidemic macroeconomics markets CNY Bitcoin gold Jerome Powell fears money management trading signals Charles Dow Dow theory primary trend Relative Strength Index signals market noise trading volume oversold/overbought corrections candle M30 GBPUSD GBPJPY pending order fundamentals Interbank order Stop order Limit order Standard account Interbank account liquidity provider M5 chart XAUUSD Chinese yuan flat US Dollar Fed Interest Rates inflation level XPTUSD platinum XAGUSD silver USDCNY Chinese Yuan instruments swap trading hours Buy Stop Sell Stop Average True Range ATR range sideways range price level trading scripts Excel tables entry point equity balance applications highs and lows RSI Fibonacci terminal server proxy OS Windows XP self-trading Forex advantages gap trading Fibonacci levels USDJPY Buy Limit Cherry Blossom market cycle mark-up mark-down consolidation distribution long positions short positions double bottom triple bottom double top triple top pattern signal presidential cycle Elliott wave Kondratiev wave
trading mindset beginners novice traders trading strategy forex trading trading plan broker losses forex mistakes trading habits women in Forex female traders risk management profit trading instruments pairs price advantages of forex leverage FXCL investments copy trading advantages of Forex social trading professional traders trading psychology demo trading buy/sell bid/ask spread Metatrader 4 market analysis technical analysis fundamental analysis trade trading platform Forex trading novice trading dealing with losses charts timeframe indicators MetaTrader 4 trading routine support level resistance level trend low-hanging fruit stop loss loss trading history long-term goals open trade close trade daily charts swing trading intraday trading scalping trading setup Forex traders bullish bearish resistance support MA 200 trend trading professional trading EMA EA daily chart weekly chart Forex news highs lows account type cent trading Mini Micro Cent Partnership commission fees trading terms Stop Loss news trading economical calendar major news release currency pair currency rate national currency trading journal trades profit/loss emotions news release positions size Expert Advisors platform trading robot cryptocurrency volatility day trading position size lot account types cent accounts Mini account ECN Copytrade ECN accounts swap-free minimum deposit order execution liquidity providers demo accounts real account low-risk trading EUR/USD economic calendar majors cross-currencies exotic currencies base currency quote currency quotes bid ask Brexit United Kingdom European Union GBP Euro GDP WTO price levels moving average 4-hour chart 1-hour chart bulls bears false breakout cross-currency USD price action pin bar trading inside bar trading hands off breakeven stop loss 50% stop loss pin bar high-frequency trading position trading swings breakout strategy trading style Entry order Take Profit hammer shooting star inside bar pinocchio bar head and shoulders harami risk to reward ratio trading calculator trader’s age emotion control stop-hunting false signal trading session New York session Asian session non-farm payrolls fed rates decision central banks mentor teacher Forex education Forex books candlesticks bonuses tradable bonus no deposit bonus deposit bonus cashback pending orders counter-trend trading risk-to-reward ratio 1-2% rule uptrend downtrend news releases slippage emotional trading stop orders limits orders trailing Stop correlation Correlation Matrix EURUSD EURJPY RSI Overbought/Oversold indicator doji morning start candlestick pattern liquidity London session gap requote US dollar greed excessive trading Expert Advisor trading instrument Twitter Trump euro canadian dollar japanese yen mexian peso currency pairs Fed China economic news currency wars USA interest rates trade agreement H1 H4 D1 sell trade buy trade price level trading system checklist Default mode network Nonfarm Payrolls intraday traders lot size Stop Out margin breakeven pip point entry price chart candles weekly candle daily candle engulfing candle Doji W1 Coronavirus epidemic macroeconomics markets CNY Bitcoin gold Jerome Powell fears money management trading signals Charles Dow Dow theory primary trend Relative Strength Index signals market noise trading volume oversold/overbought corrections candle M30 GBPUSD GBPJPY pending order fundamentals Interbank order Stop order Limit order Standard account Interbank account liquidity provider M5 chart XAUUSD Chinese yuan flat US Dollar Fed Interest Rates inflation level XPTUSD platinum XAGUSD silver USDCNY Chinese Yuan instruments swap trading hours Buy Stop Sell Stop Average True Range ATR range sideways range price level trading scripts Excel tables entry point equity balance applications highs and lows RSI Fibonacci terminal server proxy OS Windows XP self-trading Forex advantages gap trading Fibonacci levels USDJPY Buy Limit Cherry Blossom market cycle mark-up mark-down consolidation distribution long positions short positions double bottom triple bottom double top triple top pattern signal presidential cycle Elliott wave Kondratiev wave