Have you ever taken the time to draw up a gold trading strategy? Probably not or very little, because many traders now invest quite emotionally. However, drawing up an effective and visionary gold trading strategy always helps everyone to invest more profitably and professionally. The financial market today has many different gold investment channels such as:
- Invest in gold bars or bullion
- Trade gold by buying shares of mining companies.
- Invest in a gold exchange-traded fund (ETF).
- Gold trading with the futures contract
- Invest in Gold with Gold Option.
- Trade Gold CFDs.
In this article, we will dive into investment forms 5 and 6 in Olymp Trade. Now let’s learn about strategies, how to trade gold effectively and always win.
Choose a reputable online gold exchange
Buying gold bars or bullion to keep them under the bed is not practical and safe. Traders have many ways to profit from fluctuations in the price of gold. One of them is through trading Forex and Fixed Time Trade in Olymp Trade. That method does not require the trader to own real gold. Therefore, there is no need to worry too much about safe storage.
XAU/USD (with the symbol “gold”) is the most popular online gold trading instrument. Olymp Trade is one of the gold trading platforms in the world with a business license, high security and safety, and many other benefits:
- Invest with an online gold exchange licensed and regulated by the International Financial Commission (Finacom).
- Open an account quickly to invest in gold online and profit from rising or falling markets with extremely competitive leverage up to 1:500. This means that traders can open large trading positions with a small investment.
- Access the trading platform fast and securely with Web, Windows, iOS, and Android versions. Thanks to that, investors can completely trade gold on the go.
- Trade on many financial instruments like gold, indices, commodities, currencies, stocks.
When to invest in gold?
When choosing the time to invest in gold, traders need to find trading timeframes where the price moves in a certain direction. This depends greatly on the demand for gold at a particular time.
You can invest in gold almost 24/24 hours a day in Olymp Trade from 01:00 to 23:59 (Eastern European time) from Monday to Friday. Usually, the gold trading time frame with the most volatility is the US session. It’s between 16:30 and 23:00 (Eastern European Time) from Monday to Friday.
When the US stock market is open, it also opens up other gold investment channels such as gold options trading and gold futures.
So to maximize profits, you should trade in the US session. It helps you to trade with waves or reversals that bring huge profits.
How to build a Gold trading strategy
A gold trading strategy helps traders find the next market trend to place orders. Since there are so many ways to analyze the market, traders need a list of gold investing rules to follow over a certain period. It helps you to trade consistently and invest in gold with your mind, not your emotions. Here are some methods of gold price analysis.
- Fundamental analysis: This is the process of studying economic data and gold market sentiment. In times of economic uncertainty, the price of gold tends to rise as it is a safe-haven asset. Experienced traders will analyze economic changes to enter the gold market early when it has high-profit potential.
- Technical analysis: This is the process of studying prices to determine entry and exit levels. With this method, traders often use price patterns, price action, and technical indicators for analysis.
Before learning the factors that affect the price of gold and how to invest in gold, you should open a trading account in Olymp Trade to be practice and verify gold investment examples more intuitively.
Identify the factors that affect the price of gold
Many factors affect the gold price. They will change over time but we still have some key points.
– Interest rates: In times of rising interest rates, the attractiveness of gold will decrease. Investors can get a higher return on assets that benefit from rising interest rates, such as currencies
– Global economic data: As gold is considered a safe-haven asset, any significant changes in the global economy will affect the demand for gold. Assume that the global economy does not grow in mid-2022 due to the complicated developments of the Covid-19 epidemic, investors will fear a recession can occur and may choose to exit trades with high-risk investment assets to invest in safer assets such as gold.
– US Dollar: Currency fluctuations in the USD can have a big impact on the gold price. This is because every ounce of gold is pegged to the dollar. Therefore, a decrease in the USD will push the gold price up and a rising USD can lower the gold price.
All of these effects are a form of fundamental analysis. It is necessary to wait until the whole picture is displayed on the gold price chart with technical analysis. Then you can combine both types of analysis to place orders more effectively.
Use Bollinger Bands indicator for gold trading strategy
The price of gold often reflects many market conditions in a short period such as bull, bear, and sideways markets.
This is why some professional traders use technical indicators like Bollinger bands in their trading strategy. Bollinger Bands are used to identify markets that are stable and often sideways, as well as markets that are experiencing increased volatility and are about to move in a certain up or down direction.
In reality, as you can see in the picture below, price action rejection points, price reversals of the upper and lower Bollinger bands occur frequently.
The blue boxes show price rejection of the lower Bollinger band. The purple boxes show the price rejection of the upper Bollinger band. You can trade reversals in gold using the Bollinger Bands indicator as follows.
Open an UP order when the price falls out of the lower band and shows signs of reversal.
Open a DOWN order when the price falls out of the upper band and shows signs of returning to the band.
The advantage of online gold investment is the storage of a treasure trove of data. Retrieve your investment from start to finish with just one click. Grasp where your mistakes are to draw effective investment experiences in the future.
In addition, the standard gold trading process step by step is also shared by experienced people. If you can learn by yourself, that’s fine. If not, you should find a teacher to teach you from your mistakes. Surely, they are successful and know what you need to get better on the trading path.
Join the Olymp Trade Club Signal Group: https://t.me/olymptradeclub19