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Why a 30 to 50 Pips Fluctuation Means Little for XAU/USDUnderstanding Pips and Price Context In the world of forex trading, a pip (percentage in point) represents the smallest price movement in the market. For commodities like gold (XAU/USD), a pip is typically 0.01. Therefore, a fluctuation of 30 to 50 pips in gold translates to a movement of 3 to 5 USD in price. Currently, the price of gold (XAU/USD) hovers around 2400 USD per ounce. In this context, a movement of 30 to 50 pips, equating to 3 to 5 USD, is relatively minor. To put this into perspective, it’s akin to a stock priced at 100 USD experiencing a movement of only 0.13 to 0.20 USD. Gold's Historical Volatility Gold is renowned for its volatility, influenced by a myriad of factors including geopolitical tensions, economic data, inflation rates, and currency fluctuations. Historical data demonstrates that gold prices can swing dramatically within short periods. For instance, during times of economic uncertainty or geopolitical strife, gold prices can move by tens or even hundreds of dollars in a matter of days or even hours. Geopolitical Events: During geopolitical crises, such as wars or major political upheavals, gold prices often experience significant spikes as investors flock to safe-haven assets. Economic Indicators: Economic data releases, like non-farm payrolls, GDP figures, and interest rate decisions, can cause substantial and rapid fluctuations in gold prices. Market Sentiment: Changes in market sentiment, driven by news, investor behavior, and speculation, can also lead to large price movements. Why 30 to 50 Pips is Insignificant Given gold's price of 2400 USD per ounce and its historical volatility, a fluctuation of 30 to 50 pips is relatively insignificant. Here's why: Percentage Impact: A 50-pip movement at a price level of 2400 USD is just 0.21% of the total price. This is a minor change, especially in a market as volatile as gold. Daily Fluctuations: It's not uncommon for gold prices to fluctuate by more than 1% within a single trading day. This means price movements of 24 USD or more are typical, overshadowing a 3 to 5 USD change. Trading Noise: In the context of gold trading, small pip movements often represent normal market noise rather than meaningful trends. Professional traders focus on larger movements to make informed decisions, as these are more indicative of market direction. Practical Implications for Traders For traders and investors, understanding the relative insignificance of small pip fluctuations is crucial. Here are some practical takeaways: Risk Management: Traders should set their stop-loss and take-profit levels considering the high volatility of gold. Small pip fluctuations should not trigger premature exits from trades. Strategic Focus: Swing trends and significant price levels (like psychological barriers at round numbers or technical important zones) are more important than minor intraday movements. Market Analysis: Analyzing gold requires looking at broader economic and geopolitical factors rather than getting caught up in small pip changes. Conclusion: In summary, a 30 to 50 pip fluctuation in XAU/USD is relatively meaningless when considering the broader context of gold's price and inherent volatility. At a price level of 2400 USD per ounce, such movements are minor and often lost in the daily trading noise. Traders and investors should focus on larger price movements and underlying market factors to make informed decisions in the volatile gold market.
OANDA:XAUUSDEducation
by Mihai_Iacob
4
Best Trend Following Strategies for Gold. XAUUSD Day Trading The recent bull run on Gold is a perfect example of a strong trending market. For traders, such sentiment always provides very profitable trading opportunities. In this article, I will share with you 3 best trend-following strategies for day trading Gold that showed extremely high performance this year. So what I did, I back tested 4H/1H time frame since the middle of February when the bull market started. I tested various strategies: price action, SMC, multiple indicators, candlestick patterns ; and I was looking for the ones that showed the highest accuracy and profitability. 1. Moving Averages Crossover The first strategy that showed a very high performance was based on a crossover of 2 moving averages. Exponential MA with 30 length. Simple MA with 9 length. For entry signal, Simple MA should cross Exponential MA from the downside and a candle should close above both MAs'. Stop loss will be below the closest horizontal support. The setup is considered to be profitable if, after the entry, the price moved up at least by pips distance from entry to stop loss. 13 setups we spotted. 9 of them were profitable. Total winning rate is 69%. 2. Trend-Following Patterns The second strategy that showed a very high performance was based on classic price action patterns. I was looking for bullish patterns like bullish flag, falling wedge, horizontal range, double bottom, head and shoulders, ascending triangle, cup & handle. Bullish confirmation was a breakout and a candle close above a neckline of the pattern. The pattern is considered to be losing if after the breakout of the neckline, the price dropped below its lows. The pattern is considered to be profitable if, after the entry, the price moved up at least by pips distance from entry to stop loss. From 14th of February to 8th of April, I found 37 bullish patterns. According to the rules that I described above, 31 pattern turned out to be profitable. That gives 83% winning rate. 3. Break of Structure (BoS) The Break of Structure strategy is very old and based on breakouts of current highs. In a bullish trend, after the price violates the levels of a current Higher High HH, a bullish continuation is expected. A long trade is opened after the candle closes above HH or on a retest. With such a strategy, Stop Loss is lying below the last Higher Low HL. The setup is considered to be profitable if, after the entry, the price moved up at least by pips distance from entry to stop loss For the same period, I identified 21 Breaks of Structure. According to the rules, 18 setups were profitable. Total win rate is 85%. Remember that you should not overestimate the performance of these strategies. They work perfectly only in times of a strong bullish market. Such periods are extremely rare. However, once you see a strong bullish season, these strategies will help you to get maximum from it. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
10
GOLD Trading: 8 Mistakes Traders MUST Avoid in a Bull Market The unstoppable uptrend on Gold may cause irrational and very costly decisions . For the past 6 months, we've seen an unprecedented surge, with new highs being set almost daily. In this article, we will discuss critical mistakes that traders often make in the midst of such a bullish run and explore the strategies to maximize your gains. 1. Technical Indicators Lie Always remember that technical indicators that measure the momentum or strength of a market trend, that show the overbought and oversold conditions, fail miserably in strong bullish or bearish rallies. I am talking about such indicators as Relative Strength Index (RSI), Moving average convergence/divergence, Stochastic, etc. The fact that one of these indicators show overbought condition or even a bullish divergence most of the time will be a false signal. Above is the example of an overbought RSI on Gold chart on a daily. After the market became overbought, it went 1000 pips higher before the first pullback. 2. It is Never too High When the market starts setting new all-time highs, people typically start saying that the price is already "too high" and start closing their long positions or even open short positions. Remember, that the notion of too high is very subjective. Look at a bullish rally on Gold in 2020. I well remember that when the market updated a yearly high in April, People start staying that it is already "too high". However, the market kept rallying for 4 consequent months, constantly updating the highs. Such a market behavior may persist for a significant period of time, be prepared for that. 3. Beware of Overconfidence Even though bullish rallies may be long, always remember that they can not last forever. At some moment, correction or even bearish reversal will occur. For that reason, open long positions carefully, setting realistic targets. 4. Protect Your Gains and Maximize Your Profits When the market is trading in the uncharted territory, it is almost impossible to predict where it will find the resistance. With a take profit level, you may close the trade too soon. If you see that the market is driven by euphoria and keeps setting new all-time highs, remove take profit and apply a trailing stop instead. Keep that below the recent supports, use ATR or some other classic technical tool. That will help you to benefit from the entire rally. 5. DON'T SELL BULLISH RALLY When the market is driven by greed, euphoria or fear, never go against the market. The chance that you will accurately predict the turning point is close to 0. 6. Beware of Lower Time Frame Bearish Patterns In a strong bullish trend, classic bearish reversal pattern have low accuracy, especially on minutes time frames. Look at a sequence of double tops on 15 minutes time frame. These patterns are a great example of manipulations and how smart money induce retail traders to start shorting. In a such a strong bullish trend, the only strategy to rely on is trend-following trading. 7. Do Not Rely On News In times of strong bullish/bearish rallies, the data in economic calendar and important news releases stop giving the reliable signals. In times of bulls/bearish runs, emotions become the main driver of the markets, not the fundamental data. 8. If You Missed It, Let It Go I can imagine, how terrible you may feel yourself if you did not manage to buy Gold on a good price. It's sad, and it is painful to watch how the market goes higher and higher without you. But always remember a simple rule: if you missed the rally, let it go. With each new high that the market sets, your potential gains drop dramatically. I hope that these tips will help you not get burned while Gold is on fire. Stay calm and patient, and do not let your emotions intervene. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
1
Technical Analysis DOES NOT WORK in GOLD Trading Does technical analysis really work in Gold trading? In this article, we will discuss whether the traditional, classic methods of technical analysis: support and resistance, breakouts, patterns can be reliable in this specific market. We will explore the dynamics of Gold prices so far this year and discuss the most efficient way to trade Gold. So if you are a gold trader or simple interested in the market analysis, you should not miss this eye-opening discussion! First, let's discuss how Gold market behaves from the beginning of the year from technical analysis perspective. Gold started this year in a strong bullish trend, the market opened after setting a new higher high on a daily the second of January. After a formation of a higher high, the market became overbought and a correctional movement initiated. The price formed a bullish flag pattern and reached the level of the last higher low - a very important support. After the test of structure, the price bounced and violated a resistance line of a flag with a strong bullish candle. From the technical perspective, it was a very strong trend-following signal and a bullish continuation was anticipated. However, it turned out that it was a false signal, and instead of going higher, the market dropped, setting a new lower low. Why this false signal is so important is that the breakouts, key levels and price action analysis are the most reliable on a daily time frame. Such a strong combination: bullish trend, bullish pattern, key support; has a very high accuracy on a daily. That was the first time this year, when technical analysis on a daily was completely screwed . It felt like the market was turning bearish. The price violated a level of the higher low, setting a new lower low. For Smart Money traders, it is a very important event that is called a Change of Character. It strongly confirms a bearish reversal on the market. One more bearish confirmation that I spotted was a completed head and shoulders pattern formation with a confirmed violation of its neckline. That signal also confirms a bearish reversal. And again, these 2 bearish confirmations were the false signals. The price went back above the neckline and a bullish movement initiated. This time, a classic price action pattern did not work , and smart money concepts gave a false signal. Then I spotted a very bullish signal - the price violated a major falling trend line and closed above that. It clearly indicated that the market was returning to a global bullish trend. And again, that signal was completely false. And the price dropped. Trend line breakout in the direction of the trend - a classic trend-following confirmation did not work. Then we saw 2 strong bearish signals: a bearish breakout of a rising trend line and a key horizontal support with a high momentum bearish candle. It felt like now it confirms that the market is bearish and it should drop lower to the closest key support. And again, technicals failed miserably and after a retest of a broken horizontal structure and a trend line, the price just went higher completely neglecting them From the beginning of the year, technical analysis: key levels, patterns, smart money, breakouts do not work on a daily. All the signals that were spotted so far failed. If you just started trading, you may easily come to the conclusion that technical analysis does not make any sense on Gold. And you will be completely right, in that period it does not work at all. I am trading Gold and Forex for more than 9 years, and year after year I noticed that there always are the periods when some techniques, some strategies do not work. Sometimes these periods are very short, but some time they can be quite long. The only proven way to overcome such periods is consistency and proper risk management . Risking a tiny portion of your trading account per trade, you will be able to survive the stubborn market. The market always returns to normal conditions and starts respecting the technicals again. However, no one knows when. There is a famous quote by John Keynes: "Markets can remain irrational longer than you stay solvent"" And only proper risk management will keep you solvent longer than the market stays irrational. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
6
Learn Best Lot Size for Gold Trading (XAUUSD) If you trade Gold with fix lot, I prepared for you a simple manual how to calculate the best lot size for your XAUUSD trading account. Step 1 Find at least the last 10 trades that you took on Gold. Step 2 Measure stop losses of all these trades in pips Step 3 Find the trade with the biggest stop loss In our example, the biggest stop loss is 680 pips Step 4 Open position size calculator for XAUUSD Step 5 Input your account size, 1,5% as the risk ratio. In "stop loss in pips" field, write down the pip value of your biggest stop loss - 680 pips in our example. Press, calculate. For our example, the best lot size for Gold will be 0.22. The idea is that your maximum loss should not exceed 1,5% of your account balance, while the average loss will be around 1%. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
1
How to Analyze Daily Time Frame on Gold. 5 Important Things There are 5 important things that you should analyze on Gold on a daily time frame to accurately predict long term, midterm and short term movements. In this article, I will share with you a step-by-step guide for daily time frame analysis that you can apply on Gold or any other financial instrument. 1 - Identify the market trend When you analyze a daily time frame, you should identify long term, midterm and short term market trends. Long-term trend is based on the analysis of one year long price action. In the example above, Gold is trading in a long term bullish trend because the price keeps setting new higher high and new higher lows during the year. Midterm trend is based on the analysis of a price action for the last 4–5 months. Above, we can clearly see that a mid-term trend is bullish because again, the price sets new higher highs and higher lows over time. Short-term trend is based on the analysis of price movements for the last 2 months. Short-term price action is also bullish on Gold, with a clear sequence of higher highs and higher lows. According to the trend analysis, long-term, mid-term and short-term trends are bullish. 2 - Identify the directional bias The directional bias defines a highly probable future direction on the market. In our example, we can anticipate that Gold will keep growing among all the dimensions: long-term, mid-term and short-term. 3 - Execute structure analysis Identify important historic horizontal and vertical structures. That will be the points from where you should look for trading opportunities. When you analyze key levels, identify the structures that are lying close to the current price levels. Make sure that all the structures that you spotted were respected by the market in the past. 4 - Look for price action patterns Price action patterns are the language of the market. Proper identification of the patters will help you correctly understand the intentions of the market participants. You can see that a bearish breakout of a rising channel triggered a correctional movement on the market. Gold started to fall steadily within a bullish flag pattern and after it tested a key support, the price violated the resistance of the flag. 5 - Analyze candlesticks Candlestick patterns can provide extra clues and confirmations. You can see that the market formed multiple rejections from key support, an inside bar formation and bullish engulfing candle. Violation of the inside bar to the upside with a strong bullish candle is an important bullish signal. Combining trend analysis, structure analysis, price action and candlestick analysis, and you can make predictions and look for trading opportunities. You can also make your analysis even more sophisticated, for example, analyzing fundamental analysis or applying technical indicators. ❤️Please, support my work with like, thank you!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
4
Best Technical Analysis Strategies for Trading Gold If you want to trade Gold, but you don't know what strategy to trade, I prepared for you the list of 4 simple and profitable gold trading strategies. Please, note that my list includes the indicator, swing, price action and smart money strategies, so you will certainly find the one that suites you. Also, all the strategies will be strictly structure based. It means that no matter which strategy you choose, you should start your analysis with identification of key levels on a daily time frame. Example of structure analysis on Gold. 1. Breakout trading on a daily time frame With that approach, we will be aiming to catch swing moves. Your bearish confirmation will be a bearish breakout - a daily candle close below a key support. A bearish continuation will be anticipated to the next closest daily support then. Your bullish signal will be a bullish breakout of a key daily resistance. Then you can buy aggressively or on a retest, expecting a bullish continuation to the next strong resistance. In the example above, bearish breakout of a key daily support was a strong bearish signal that triggered a massive selloff. This strategy is based only on a daily time frame analysis, the next 3 strategies will be more sophisticated and involve multiple time frames analysis. 2. Price action confirmation strategy With that approach, you should patiently wait for a test of one of the key structures that you spotted on a daily. After that, you should monitor the reaction of the price to that on 4h/1h time frames. Your signal to buy will be a formation of a bullish reversal price action pattern on a key support, while your bearish confirmation will be a bearish pattern on a key resistance. Once you spotted a confirmation, you can anticipate a bullish/bearish movement, at least to the closest 4h structure. In the example above, Gold tested a key daily support. The price formed a double bottom formation on that. Its neckline breakout was a strong bullish signal. A bullish movement initiated to the closest 4H resistance then. 3. Moving average confirmation strategy For that method, you will need 2 moving averages: simple MA with 9 length and exponential MA with 20 length. Once the market tests a key support, you should look for a crossover. A simple MA should be above the exponential MA. It will be your bullish signal. After a test of a key resistance, look for an opposite crossover. A simple MA should be below the exponential MA. It will give you a strong signal to sell. Here is how the MA crossover would help you to predict a bullish movement on Gold on an hourly time frame. 4. Smart money confirmation strategy With that approach, you should look for a break of key daily structure on 4h/1h time frames. After a violation of a key support, you should look for a bullish imbalance so that the price should return above the broken structure. That will be your signal to buy. After a violation of a key resistance, look for a bearish imbalance. The price should come back below a broken structure. It will be your signal to sell. After a test and a violation of a key daily resistance, Gold formed a bearish imbalance on a 4H time frame. It was a strong bearish signal. All these strategies are very efficient. However, they will work after you learn to correctly identify key structures. Let me know in a comment section which strategy do you prefer. ❤️Please, support my work with like, thank you!❤️
FXOPEN:XAUUSDEducation
by VasilyTrader
6