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  • Trading Knowledge  >  Trading Blog

5 December 2022,03:55

Trading Blog

6 Key Gold Trading Strategies To Know

5 December 2022, 03:55

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In order to maximise your profits, understanding gold trading strategies are vital.

Gold trading strategies are referred to as guidebooks by many gold traders to navigate how to manage a trade and when to close it. However, each form of a transaction has its own characteristics and not all trading strategies used for trading other products can be used to trade gold as well. Here are 6 key strategies you should know.

Gold Trading Strategy 1: Position Trading

One of the most common trading strategies utilised by gold traders is position trading. In this strategy, traders are less concerned about short-term price adjustments and recent news, as they rely greatly on long-term perspectives on the positions they have purchased. In the case of gold trading, traders plan their next steps by estimating shifts in the asset prices based on several factors. Check out some gold trading tips on how traders can estimate long-term gold price adjustments based on a few factors.

Gold Trading Strategy 2: News Trading

In news trading strategy, gold traders make decisions based on news announcements. Gold prices are often affected by economic events taking place and scheduled events are something one could look out for and be prepared for. These scheduled events can be in the form of economic data releases such as the US Nonfarm Payrolls (NFP) on the first Friday of every month, and central bank meetings like the Federal Reserve meetings which take place annually.

As the above-mentioned events impact significantly on gold prices, both beginner and professional traders can exercise this trading strategy. 

Gold Trading Strategy 3: Day Trading

In a day trading strategy, gold traders will focus on a specific time or session in the daytime. Unlike the scalping strategy, this trading strategy involves using M15 to H1 charts and finding only 2-3 trade opportunities per day. Due to it being a highly liquid and volatile trading instrument, gold trading gives spreads that are relatively low yet being able to present themselves as well. 

Want to Master the Important Fundamentals of Gold Trading?

small gold bars placed in order to form an upward gold trend chart on top of big gold bars

Gold Trading Strategy 4: Trend Trading

Trend trading strategy, another common strategy, requires traders to analyse trend directions with the help of financial instruments and technical indicators. When the gold asset prices are observed to be following an upward trend, it would be more logical for traders to enter into a long position and make a purchase. Likewise, if the asset price is observed to be following a downward trend, traders could just go short and sell the asset. 

This trading strategy is commonly used in gold trading, because of its high volatility nature which leads to strong trends forming from time to time. When exercising this trading strategy, gold traders usually check out the technical indicators as well to help them make decisions. Check out the below articles to find out more about how you could do this:

The Basics of Technical Analysis

Technical Analysis: Chart Patterns

Gold Trading Strategy 5: Price Action Trading

Price action refers to the movement of an asset’s prices plotted over time, and price action trading refers to making decisions according to a certain instrument’s price adjustments without using technical indicators. These gold traders derive chart patterns and technical analysis formations through calculations based on past asset prices. The information they get will be projected into the future to inform trades, enabling them to make trade decisions next step ahead. 

Many traders use candlestick charts to help them in visualising price movements by showing the open, high, low and close values in the context of up and down sessions. 

Gold Trading Strategy 6: Copy Trading

Last but not least, a gold trading strategy that traders, especially beginner traders, can consider is the copy trading strategy. It is a portfolio management strategy that involves traders copying the trading actions of other traders, who are most probably more professional at trading the particular asset. It is possible to get your own trades traded automatically with copy trading apps in which signal providers specialising in gold trading are readily available. They are definitely helpful for both beginner and professional traders looking to master the concept of gold trading.

Final Thoughts

The importance of keeping gold trading strategies in mind is undeniable. However, it should come hand in hand with trading psychology for one to succeed at gold trading. It is important for traders to not be affected by emotions, and maintain a calm demeanour instead in order to make wise decisions in the long run.

Learn How To Get Started With Your Gold Trading Journey?

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