Gold Trading Tips

Gold Trading Tips

The market in gold tends to hold a lot of opportunity for savvy investors. While it’s not for the weak in heart, it can be extremely lucrative for investors who take time to learn and understand what drives the prices up or down and when is the best time to buy and sell. Here are some tips for trading gold from seasoned professionals.

The Volatile Side of Gold

As rewarding as trading gold can be, the market can experience huge upswings followed by quick downturns. The daily range reflects how wild the market can go. The average on certain days can be as low as 160 pips but the ranges on other days can easily be between 300 and 500. Taking into account those wide spreads, gold can dive down or swing up around 80 to 100 pips in a matter of minutes. You can be watching prices and ready to make a trade when you see the market going up, but then suddenly the price plummets. That said, if you put in a draw down at the right time, you can realize nice profits. Because of these quick swings up or down, you must have a plan in place before you consider entering. Preplanning will be a great asset when the time comes to make split-second decisions. Deciding ahead of time at what point you’ll buy or sell will help minimize your risk, even though the outcome is hard to predict.

Timing is Everything

It is typical in gold trading that while monitoring the market during the daytime hours, it holds up pretty well. However, when you get into the final two hours of the New York trading session the pace can slow down. The same goes for the first two hours or so of the session in Asia. If you want good movement in gold, hit the hours the markets are open both in New York and in London.

Entry Trades in Gold

For successfully gold trading, it is important to wait until candle close. In the final few minutes before ending an hourly, half hour or 4-hour candle, prices can take huge reversals. You should expect this to avoid last minute losses. No matter what the general trend has been during a session, those closing minutes can be crucial. It’s safest to take in a longer timeframe.

Stick With Your Plan

While gold trading can be lucrative and rewarding, that is not the case if you make snap decisions. To reach a degree of success you must stick with your plan. Yes, you can always make adjustments to your trading strategy, but the market doesn’t allow for quick decisions that don’t fit into your plan. Keep in mind that you can lose very quickly when the market moves in either direction. If your plan needs tweaking, do it between trades, not when the market is moving fast and you suddenly want to change your strategy. Make your changes when the market is calm and you can think clearly.