Top#5 Gold Trading Strategy – Trading fuel:

  • Gold is considered the most precious metal.
  • It is also considered the safest metal in tough times.
  • In today’s time, gold is traded by both long-term as well as short-term traders.
  • Both the traders have their own goals.

Here you can find Idea Top Gat Successful in Gold Trading

They are as follows:

Gold Trading Strategy

Gold Trading Secrets:

  • There is a direct correlation between how gold moves and the gold seasonal patterns.
  • In a year, there will be times when gold will be strong and times when gold will be weak.
  • It would be great to know when the price of gold would rise or fall.
  • What seasonality means is actually how the summer and winter work in the world.
  • The gold patterns will work with the same tendency.
  • Gold prices have the tendency to go up in the very first quarter of the year.
  • Prices will also rise in the last months of the year.
  • Hence, September would be considered the best month for the gold price if you wish to buy the same.
  • These are just the general indicators.
  • The gold seasonal cycles will give you an idea of the best tendency of gold from bottom to top, or rally or fall at a given point of time.

Must Know: Best 5G Stocks to Buy in India

The below chart for gold will give you the best perspective of the seasonal patterns:

Gold trading secrets

This cycle is considered to be the most crucial one because it is one of the tools that will highlight what smart money is doing.

Some of the very indicators that are used to successfully trade gold are as followed:

success gold trading strategy

Simple Gold Trading Strategy:

  • If you are planning to simply invest in gold and buy and hold for the long term, you will be able to take advantage of our simple gold trading strategy.
  • You will have to use this strategy to time the market.
  • This trading strategy will make it simple to see the change in the gold trend.
  • After looking at these trends, you will be able to spot both the buying as well as the selling opportunities.

The main steps to apply to understand the best gold trading strategy are as follows:

Step 1: Buy gold in the trading months with the above average return:

  • The first and foremost step is to make sure that the gold price has the tendency to rally in some of the particular months.
  • As per the gold seasonal pattern, the best months to buy gold are January, February, August, September, November, and December.
  • The only commonality during these months is that the gold price return is above average during these trading months.
  • The seasonal price patterns for gold will tend to repeat themselves quite often because smart money tends to do the same thing over and over again.
  • After spotting the influence of seasonality on the gold price, it is our time to move to the next trading rule.

Also Read: How to Invest Gold Online?

Step 2: Wait till the gold retrace to 0.618 Fibonacci Retracement of the previous market swing:

  • It is just not enough to identify the seasonal pattern and just focus on the same.
  • When you combine both the seasonal pattern as well as the Fibonacci Retracement indicator, this will alert you that the potential gold opportunity is lying ahead.
  • This is the most robust trading system, but you will have to be flexible with the rules as well as try to fit them into the overall price action as well.
  • When gold trades below 0.618 Fibonacci retracement of the previous market swing, then you can pick up right from there.

Step 3: Buy at support or on the way up as we break above resistance:

  • Always remember, when you are dealing with this trading principle, then it is all about flexibility.
  • For buying gold, we propose a very simple technique.
  • If the price of gold at the time of your analysis is trading at support, then you can go ahead and eventually buy it.
  • Even if the market starts rallying before we enter into January, wait till we break above the previous resistance to buy gold.
  • When the gold price follows its seasonality cycle, this will mean that our analysis is correct.
  • The next most important thing we need to establish for our gold strategy is where to place our protective stop loss.

Step 4: Place the protective stop loss below the last swing low:

  • If we see that gold is following its seasonal pattern, then new highs should be seen and not new lows.
  • If gold is breaking new lows, this will invalidate our trade and then we have to be out of our position.
  • If we trade gold with this strategy, we have to place a protective stop loss below the last swing low.
  • After we learn about our stop loss, let us define our profit strategy.

Step 5: Take profits before the end of February and then trial your stop loss below each swing low:

  • If gold starts to follow the seasonal pattern in the very first months, it is wise to expect it to continue to follow the seasonal cycle that is moving forward.
  • As per the gold seasonal pattern, March is considered one of the worst trading months for gold.
  • Hence, it is best to liquidate your gold position and then enjoy your profits.
  • If you use this simple gold strategy, you will be able to anticipate the new gold trend and eventually make some big profits from it.
  • You can also find the sell signals using the exact opposite trading rules.

Also Read: Why Gold Prices are Rising in India

Conclusion:

We hope that the above blog has given you clarity about the best gold trading strategy.

Frequently Asked Questions (FAQs)

Answer: In this strategy, a trader will look to buy gold if a shorter-term moving average crosses above a longer-term moving average and sell when the shorter-term moving average crosses below the longer-term average.
Answer: Monetary policy that is controlled by the Federal Reserve is perhaps one of the biggest influencers on gold prices in the market.
Answer: When the interest rate increases in US dollars, it will push gold prices lower because gold prices will be denominated in US dollars. The real drivers of the gold price are affected by factors such as equity prices as well as volatility coupled with general supply and demand.
Answer: Rural demand will play an important role in the demand for gold.
Answer: As per the Hindu calendar, Akshaya Tritiya is the most auspicious day to buy gold in India.
About Us:

Trading Fuel is our website for blogs where we imbibe knowledge about sectors such as finance and economics, as well as stock market analysis like intraday trading and technical analysis. Stay tuned with us for more of these other investment-related blogs.

Author

Prashant Raut is a successful professional stock market trader. He is an expert in understanding and analyzing technical charts. With his 8 years of experience and expertise, he delivers webinars on stock market concepts. He also bags the ‘Golden Book of World Record’ for having the highest number of people attending his webinar on share trading.