For some people, they believe that gold is one of the most challenging things to trade. This is indeed true and it’s because unlike other markets, gold doesn’t move. If investors want to be successful in this trade, they have to take note of some things.
After many years of analyzing and monitoring the market, you will learn several patterns and rules. You can apply them in the trade of precious metals too.
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Keep the Gold Sizes Small
First, you have to keep the sizes of your gold and other precious metals small. The greater the chance of being correct, the bigger the chance and position can be. As such, the sizes of long-term investments are greater than the short-term trades, according to Bullion79.com
Be Attentive to Turning Points and Cycles
Source: The Economic Times
There are markets with cyclical nature like silver and USD index. Cycles can help a lot when it comes to long and short term trades.
Check the Indicator Efficiency
Next, you have to check the efficiency of the indicator that you wish to utilize in the gold market. Do this before you apply and trade it for real capital.
Use the Stochastic Indicators
Source: Derivative Trading Systems – WordPress.com
You can also consider using the stochastic indicators for silver, mining stocks, and gold since these indicators have been proven for many years. Meanwhile, you can also use other indicators because this can also be useful. However, see to it that you examine them before deciding on a trading technique which is based on these indicators.
If a given indicator is useful and you find potential in it, don’t be afraid to adjust it. For example, in RSI, you find that there is a good selling opportunity as you move the indicator to 65 to 70. Then, it will be profitable or useful when you add oversold or overbought level. If you break it, you can make a signal or change the indicator parameter, which deviates from the standard values.
Use Moving Averages
Another tip is to use moving averages only when you find that it is working on a specific market in the past. If the market has been ignoring such on a moving average, this can also possibly happen to you.
Take Note of the Seasonal Changes in the Price
Source: ADVFN
It is also a must to keep track of the price changes seasonally. You can use a tool to take note of the derivatives that can have an impact on the price of the gold. But if you don’t have access to some tools, you can use the regular seasonality than not using any at all.
Make Use of the Trend Channels and Trend Lines
These have been proven useful as resistance and support lines or levels by Bullion79.com in the case of silver, gold, and mining stocks. The more significant highs and lows are utilized for making a trend channel or line, the stronger the resistance or support can be.
Take note that markets do not only have cyclical nature, but they have a fractal one too. The price patterns on a bigger scale can be proportionately similar on a smaller scale. This can be a great help as you determine the movement of the low or high gold.
