The price of Gold is influenced by a wide range of economic aspects. This is the reason why the XAUUSD pair is incredibly volatile. Many traders are attracted to Gold but trading this precious metal should be supported by some powerful strategy.
If this is what you are interested in, if you wish to enter Gold trading world, this article is for you. I will present a simple and effective strategy that is perfect to trade Gold on Forex.
A strategy for Gold trading on the Olymp Trade platform
The first thing you should do is to set the chart. Go to the “Fixed Time” tab (formerly “Options”) and select “Commodities”. You will find Gold in the list.
Then, you have to set two Simple Moving Averages. The strategy is based just on them. Two Moving Averages with different periods. So go to the indicators feature and find the SMA. Set the period for 24. Click on the indicator icon again and select the SMA one more time. This one though should be set for a 120-day period.
The first SMA’s purpose is to identify trading opportunities. The second one is here to show tradable trends.
The price of Gold depends on many aspects. US Dollar price fluctuations are one factor, but geopolitical changes have no less impact. Despite high volatility and not having one major indicator to highlight the momentum of the trend, the strategy described here proved its efficiency. It was designed specifically for trading Gold and it successfully eliminates wrong signals.
How to use the strategy to trade Gold at Olymp Trade
The strategy can be used for the XAUUSD pair for the timeframes that are no shorter than 5 minutes. The length of the transaction depends on the timeframe you are using. However, it is recommended that you set the expiry time 10 times larger than the timeframe. If you trade on a 5-minute chart, your transaction should last 50 minutes. If you trade on a 1-hour chart, hold the position for 10 hours.
To open UP position you should wait for the following signals:
- The SMA24 is moving above the SMA120 for a long time
- The price bar crosses above the SMA24
To open DOWN position the following rules apply:
- The SMA24 is moving below the SMA120 for some time
- The price bar crosses below the SMA24
For the signal to be valid, the candle that is crossed by the SMA has to close completely. Only then you receive a confirmation to enter the trade.
Make sure to open only one position at a time. Moreover, do not enter a Gold market when there is some important news to be announced that are connected to the economy in the USA. They could change the situation on the market dramatically.
Advantages and disadvantages of the Gold strategy
Presented strategy is straightforward and really easy to apply. It proved its reliability over time and it gives accurately the signals. The traders using this strategy are able to capture plenty of signals in long trends. And all this without a need of spending long hours staring at the computer.
What may be considered as a disadvantage is that the strategy only works for Gold trading. And the other thing is it requires a lot of patience. But essentially trading is all about patience.
Gold is known for its volatility. The unforeseeable price fluctuations make it very difficult to trade. On the other hand, it is also a very appealing asset as the results may be spectacular.
Today’s strategy is simple. It is designed for Gold pairs and had shown effectiveness. If you follow the rules, you should not have any problems with entering the market at the correct time.
Make sure you practice using this strategy on the Olymp Trade demo account. It is free of charge and you trade with demo currency there. Without risking your own funds, you can try this new Gold strategy.
Best of luck!
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?
Download this article as PDF. (English)Enter your Email Address