Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

mohsinqureshii

Secrets of Trading Gold.

Recommended Posts

TRADING GOLD

 

“ The desire for gold is the most universal and deeply rooted commercial instinct of the human race.” Gerald M. Loeb,

 

EVERYONE’S TALKING ABOUT GOLD – WHAT IS IT ALL ABOUT?

 

Human beings have long valued and treasured gold for its inherent lustre and malleability. In fact, gold has been used in human commerce since the societies of the ancient Middle East over 2,500 years ago, making it the oldest form of money still recognized today.Gold’s long track record as a store of value despite wars, natural disasters, and the rise and fall of great empires means that it is generally seen as the ultimate “safe haven” asset.

 

Therefore, it’s not surprising that interest in owning and trading in gold has skyrocketed in recent years with the onset of the Great Financial Crisis in 2008. Gold prices have risen in sympathy, hitting an all-time high above $1900 in late 2011. In this brief guide we will discuss the major forces that drive gold prices, along with some of the common methods for trading gold and a brief overview of possible trading techniques.

 

attachment.php?attachmentid=37568&stc=1&d=1388601096

THE MECHANICS OF GOLD TRADING

 

Physical gold is valuable because it represents many of the qualities of ideal money. It is scarce, durable, portable, uniform across the world, and widely accepted—in part due to its long history of being widely accepted. However, in the current digital world, few traders actually take physical possession of gold bullion. Instead, most traders focus on trading the current “spot” gold price, which is based on the price of the most active futures contract on the COMEX (Commodity Exchange) in New York. For all intents and purposes, you can trade gold as you would any other trading instrument at GFT Markets.

 

Two of the most common ways to trade the price of gold are through CFDs or spread betting. Both of these products offer leverage, meaning that traders can control £1,000 of gold with less than £1,000 of margin. Leverage can offer great potential for profit if the market moves in your favor, but it can also lead to a large, rapid loss if the market moves against you. Therefore, it is essential to practice good risk management and place a stop loss with every trade.

 

FACTORS THAT INFLUENCE ITS PRICE

 

Gold is one of the most difficult financial assets to value. As we alluded to above, gold is similar to a currency, such as the U.S. dollar or the euro, in many ways; unlike these more commonly traded currencies, though, gold is not supported by an underlying economy of workers, companies, and infrastructure. In other ways, gold is more similar to a commodity like oil or corn because it comes from the ground and has standardized physical characteristics. Unlike other commodities, however, gold often fluctuates independent of its industrial supply and demand.

 

One of the most reliable historical determinants of gold’s price is the level of real interest rates, or the interest rate less inflation. If you think about it, this relationship is relatively straightforward. When real interest rates are low, investment alternatives like cash and bonds tend to provide a low or negative return, pushing investors to seek alternative ways to protect the value of their wealth. On the other hand, when real interest rates are high, strong returns are possible in cash and bonds and the appeal of holding a yellow metal with few industrial uses diminishes. One easy way to see a proxy for real interest rates in the United States, the world’s largest economy, is to look at the yield on Treasury Inflation Protected Securities (TIPS).

GOLD TRADING STRATEGIES

 

As with any trading instrument, there is no one “best” way to trade gold. Many traders from other markets have found that the technical trading strategies they employ on other instruments can easily be adapted to the gold market, especially given gold’s tendency to form durable trends. That said, longer-term traders could go a step further by using a filter based on the level of real interest rates discussed above.

 

The below chart shows the relationship between gold prices and the yield on TIPS, a proxy for real interest rates in the United States. The inverse correlation is obvious, but it looks like the recent gold rally accelerated further as real yields dropped below 1% in early 2009. A longer-term look at the relationship would reveal that gold prices generally fell in the late 1990s, for instance, which were characterized by real yields above the 1% threshold.

 

attachment.php?attachmentid=37567&stc=1&d=1388600922

 

Therefore, longer-term traders may want to consider only buy trade opportunities if real yields are below 1%, a level which has historically been supportive of gold prices. Conversely, if real yields rise above 2%, traders may want to focus only on sell trades. The ability to use a filter based on real interest rates is one of the unique features that long-term traders can use to gain an edge when trading gold, but the trading strategies and opportunities in trading the world’s oldest “currency” are truly limitless.

Gold.png.27d325a012f8a5b4e82c8cda3beafa16.png

gold-trading-forex.jpg.05d96a2ed93c159a71dc0fb253046829.jpg

Share this post


Link to post
Share on other sites

Thank you anyway, though the article is not very valuable to be honest to most traders and you put too much words in describing the simple relevance between yield and gold price, which , actually can be said in one or two simple sentence. I respect your work, but time is limited I'm sorry

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Similar Content

    • By ridhuanuzz
      Here are some trading courses that I know they have experienced trader as a teacher:
      - Stock Trading & Investing for Beginners by Udemy
      - Consistent Profits from Stocks With AI Assistance In Just 10 Minutes a Day! by Snap Academy
      - Trend Following For Stocks by Decodingmarkets
       
      Give me advice which one is the best to join?
    • By sergio
      Hi,
      We are doing a university job where we must investigate how banks manage their financial products that require trading, for example, they offer a fund, as they manage capital internally. Could you help me?
      Thank you!
    • By millonmethod
      Hello everyone!
      I am an advanced trader, with many years of experience (about 15 years - 10 living exclusively from this)
      I am going to give you some tips that you must know:
      There are going to be many people who tell you that trade is easy, that with only crossiing a line  with another one you will win a lot of money.... and that´s not true.  No, Sir, reality is far away from that. Many people who start arrive here with the hope that someone "gives them" a free method, they watch youtube videos thinking that this will give them the "strategy" and in a few days they realize that it does not work for them - they lose money - and then They go looking for a new one ... and so on. YES, IT´S TRUE YOU EARN IN TRADING, A LOT. BUT THINK: for a few to win (10% + any BROKER) many others must lose (90% people). YOU MUST HAVE A MONEY MANAGMENT FORMULA ( you can email me) People study so many years to live on this, not because they are dumb, but to know what they do, when, and have absolute effectiveness. It´s very easy to get lost here: do not disperse, jumping from one to another strategy WILL NEVER give you money, it will only waste your time and make you nervous when trading. PEOPLE WHO CHANGE THEIR METHOD CONSTANTLY : LOOOOSE ALWAYS.   If you have the knowledge to develop it, take your time and do it.  Always try it first on DEMO for at least 2 weeks! If not: search to buy a solid strategy (no you tube videos pleassse ! Avoid losing money! ) This is like any business, it requires some capital to start (capital = money in the broker + solid made /purchased strategy) If you are lost: I RECOMMEND YOU NOT TO WASTE TIME IN YOUTUBE, JOIN PEOPLE WHO HAVE EXPERIENCE AND IF YOU ARE GOING TO BUY A METHOD ... PLEASE !!!! DO NOT BUY 10 BAD AND CHEAP METHODS, SAVE MONEY AND BUY ONLY 1 BUT EXCLUSIVE AND MUST ALLWAYS HAVE SUPPORT !!!!!  Do not buy Signals! They never keep up with constant profits! One week will win and the next will lose. Nothing that does not depend absolutely on you will give you the money you are looking for. And if you do not have a strategy (made or purchased) do not even try PLEASE PLEASE PLEASE: DO NOT USE REAL MONEY! AT LEAST 2 WEEK DEMO FREE HELP HERE!!!!!  IF YOU FOLLOW MY ADVICE YOU WILL BE PART OF THAT 10% WINNER, email me.
      Have a nice trading day
       
       
    • By Georgebro8
      So I've been 18 for about 4 months, since I turned 18 I started up an account, and basically thought I was doing amazing because of beginners luck, put in some of my savings and managed to do well, some days I would make £200, one day I even made £900, after time I lost my profits and made a loss as well. I've realised I need to spend the time analysing the market and making technical judgments. I'm trying to read more and spend a lot of my time looking at the charts. is there any advice people can give me. and is making 5% a week a realistic goal to set myself? before anyone assumes that im looking for a get rich quick scheme, im certainly not, I see every loss ive made as a lesson and ensure that I learn from each mistake I make. 
      any advice about indicators, strategies, how to analyse the market, or even analysing earning reports would help me.
    • By vin2019
      Are you a gold trader?
      Are you planning to invest in gold?
      Are you looking to make profits from gold trading?
      If yes then get all profitable gold trading signals and strategies for 2019 -

      https://www.mmfsolutions.sg/services/xau-usd-signals
  • Topics

  • Posts

    • Can I use this EA on my Hotforex platform? How do I do that? 
    • Why are Market Wizard's insults and humiliations tolerated with impunity whereas our replies are sistematically banned? Just curious.
    • Bitcoin (BTC) Consolidates As Bears And Bulls Tussle Above $9,400 Support Key Resistance Zones: $10,000, $11,000, $12,000 Key Support Zones: $7, 000, $6, 000, $5,000 BTC/USD Long-term Trend: Ranging Bitcoin has failed to break above $10,400 overhead resistance. The bulls made two unsuccessful attempts at the resistance. In the recent one, the bears took the price to a low of $9,290 and then pulled back above $9,400. In the interim, the price is fluctuating above $9,400 and approaching the high of $9,800. As the bulls have failed to push above the overhead resistance, the pair may commence a range movement. Nonetheless, it is anticipated that if the bears break below the $9,400 support, selling pressure may resume. Meanwhile, BTC may continue the range-bound movement. BTC/USD – Daily Chart Daily Chart Indicators Reading: After the downward move of Bitcoin, the Relative Strength Index has also fallen to level 52. This simply means the coin is above the centerline 50. In other words, BTC is in an uptrend and it is likely to rise. Price broke the support line of the ascending channel. The uptrend will be in proper perspective only when the bulls break into the ascending channel. BTC/USD Medium-term Trend: Bearish On the 4- hour chart, Bitcoin now trades between $9,400 and $10,200 after the first breakdown at the $10,400 overhead resistance. The bulls tested the resistance at $10,200 twice , before the downward move. The large bearish candlesticks tested a low of $9,290. However, the small body candlesticks that follow are called indecisive candlesticks. BTC/USD – 4 Hour Chart 4-hour Chart Indicators Reading Presently, BTC is trading above a 25% range of the daily stochastic. That is the coin is in the bullish trend zone. The 21-day SMA and the 50-day SMA are sloping horizontally indicating a sideways trend. General Outlook for Bitcoin (BTC) From every indication, if the bulls fail to push above the overhead resistance, the price action in October and November will repeat itself. For the past three days, BTC is still fluctuating above $9,400. Instrument: BTC/USD Order: Sell Entry price: $9,700 Stop: $9,900 Target: $8,400 Note: Learn2Trade.com is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results Source: https://learn2.trade 
    • The Sharp Recovery In EURJPY Lose Momentum, Falters Beneath The Level At 121.00 EURJPY Price Analysis – February  21 The single European currency rose 88 basis points or 0.73% against the Japanese yen in the previous session. After two consecutive sessions showing strong growth, EURJPY is now losing some momentum amid JPY bulls. Key Levels Resistance Levels: 122.37, 122.87, 121.00 Support Levels: 119.99, 117.08, 115.83 EURJPY Long term Trend: Ranging The EURJPY rebound from the level of 118.46 continues to advance from the previous session, but today it has stalled. Super-speed acceleration claims that a decline from 122.87 level could have ended in three waves to 118.46 level. However, the support level formed by the intersection of the moving average of 5 and 13 at 119.90 level can support the exchange rate during the trading session on Friday, while greater advance can continue from the level of 115.83. EURJPY Short term Trend: Ranging From an analysis of the 4-hour time frame, the intraday bias is now on the rise for a resistance level of 121.15 at first. The breakthrough will be aimed at 122.87 high levels. On the other hand, a breakdown of the secondary support levels of 119.99 could change the bias towards lower testing to retest the low level of 118.46 instead. Instrument: EURJPY Order: Sell Entry price: 121.00 Stop: 119.66 Target: 121.47 Note: Learn2Trade.com is not a financial advisor. Do your research before investing your funds in any financial asset or presented product or event. We are not responsible for your investing results Source: https://learn2.trade 
    • What makes InstaForex a good choice is that it is a reliable binary options trading platform so the trader would not have to dread anything if he decides to choose this platform.  They offer a 24/7 consultancy support. The exclusive online support facilitates the trader to get all the help that he has been looking for so far. This means that if the trader has any questions he can put them up ready to reach a solution to his problems. InstaForex provides trading binary options on currency pairs, cryptocurrency pairs, metals, and CFDs on shares.   InstaForex Broker 2.000$ Forex / Binary Options No Deposit Bonus! Crypto Trading Available! https://binaryoptionsfree.eu/review/instaforex-broker-2-000-forex-binary-options-no-deposit-bonus/
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.