Irik_trader
New Member
The key gold trading strategy for trading all markets, including gold, is the same and it’s about managing position sizes.
1. Pay attention to cycles and turning points.
Many markets have a cyclical nature (i.e., the USD Index) and cycles and turning points can be of great help in the case of short- and long-term trades.
2. Check the efficiency of each indicator.
Before applying any indicator on the gold market (or other markets), and trading real capital based on it, be sure to check whether it’s working consistently. Just because it worked before doesn’t guarantee that it will work once again, and if it didn’t, it’s a big warning flag. Just as someone’s good reputation doesn’t guarantee that they will be honest, someone’s reputation as a liar (verified by yourself) suggests that you might be better off getting information from someone else.
3. Consider using RSI and Stochastic indicators.
RSI and stochastic indicators for gold, silver and mining stocks have proven to be useful over many years. MACD might be useful as well, but mostly in the case of very long-term moves. Other indicators can also be handy, but be sure to examine them before you decide to make trading decisions based on them.
4. Modify indicators if necessary.
If a given indicator works “almost as well” as you’d like it, but you see that it has further potential, don’t be afraid to modify it. For example, in the case of RSI, if you see good selling opportunities when this indicator moves to 65 or so (instead of the classic 70 level), then it can be useful and profitable to either (1) add an additional overbought / oversold level, (2) breaking which would generate a signal (in this case a sell signal) or (3) to change the parameters of the indicator, deviating from the standard values.
5. Use moving averages only if they worked for a given market in the past.
If a particular market has been ignoring certain moving averages, most likely so can you. In fact, this is the “golden rule” for all tools and indicators – if they haven’t worked on a given market previously, it might not be the best idea to count on their usefulness next time. In the case of gold, the 50-day moving average works quite often (as both support and resistance), but it doesn’t work every time. It’s therefore a good idea to use it as resistance or support only if other techniques confirm it.
6. Keep track of the price seasonality.
Just like autumn or spring come with their particular set of weather patterns for different parts of the world, the gold market and other precious metals are affected by what is called price seasonality. Understanding these market patterns is important to knowing when it’s a good time to consider trading gold, and in the case of bad weather for the yellow metal, when to short it perhaps.
7. Use trend lines and trend channels.
Trend lines and channels have often proven useful as support and resistance lines / levels in the case of gold, silver and mining stocks. The more significant the lows or highs are when used for creating a given trend line or channel, the stronger the support or resistance is.[/B]
1. Pay attention to cycles and turning points.
Many markets have a cyclical nature (i.e., the USD Index) and cycles and turning points can be of great help in the case of short- and long-term trades.
2. Check the efficiency of each indicator.
Before applying any indicator on the gold market (or other markets), and trading real capital based on it, be sure to check whether it’s working consistently. Just because it worked before doesn’t guarantee that it will work once again, and if it didn’t, it’s a big warning flag. Just as someone’s good reputation doesn’t guarantee that they will be honest, someone’s reputation as a liar (verified by yourself) suggests that you might be better off getting information from someone else.
3. Consider using RSI and Stochastic indicators.
RSI and stochastic indicators for gold, silver and mining stocks have proven to be useful over many years. MACD might be useful as well, but mostly in the case of very long-term moves. Other indicators can also be handy, but be sure to examine them before you decide to make trading decisions based on them.
4. Modify indicators if necessary.
If a given indicator works “almost as well” as you’d like it, but you see that it has further potential, don’t be afraid to modify it. For example, in the case of RSI, if you see good selling opportunities when this indicator moves to 65 or so (instead of the classic 70 level), then it can be useful and profitable to either (1) add an additional overbought / oversold level, (2) breaking which would generate a signal (in this case a sell signal) or (3) to change the parameters of the indicator, deviating from the standard values.
5. Use moving averages only if they worked for a given market in the past.
If a particular market has been ignoring certain moving averages, most likely so can you. In fact, this is the “golden rule” for all tools and indicators – if they haven’t worked on a given market previously, it might not be the best idea to count on their usefulness next time. In the case of gold, the 50-day moving average works quite often (as both support and resistance), but it doesn’t work every time. It’s therefore a good idea to use it as resistance or support only if other techniques confirm it.
6. Keep track of the price seasonality.
Just like autumn or spring come with their particular set of weather patterns for different parts of the world, the gold market and other precious metals are affected by what is called price seasonality. Understanding these market patterns is important to knowing when it’s a good time to consider trading gold, and in the case of bad weather for the yellow metal, when to short it perhaps.
7. Use trend lines and trend channels.
Trend lines and channels have often proven useful as support and resistance lines / levels in the case of gold, silver and mining stocks. The more significant the lows or highs are when used for creating a given trend line or channel, the stronger the support or resistance is.[/B]
