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Mechanical Consistency; Gold (XAUUSD) Trade Review for 01 AugHi, This is a trade review for 01 Aug 2023. Here are some details for the trades. OANDA:XAUUSD 1-hour time frame 2% per trade 1 loss, 1 win (trade still open with take profit 1 achieve) Net -1% currently. Disclaimer: Not Financial Advice! I'm just sharing my trading journey. Please take it as educational content. Thank you! Tuesday, Gold fails the upward push and falls below the market structure, triggering and losing my first trade. Luckily, the price is able to hold at my 2nd trade level. Retracing back to my first take profit level, recovering half of my loss. The 2nd is currently still open with 0 risk running. As a full-time working individual, I do not have the time to constantly monitor the charts and look out for the "perfect" trading opportunity. This is why I adopt the mechanical trading strategy to earn extra money. This approach eliminates the need for extensive technical or fundamental analysis and removes any guesswork. It is a 100% Mechanical rule-based strategy, ensuring disciplined and consistent decision-making. Here's how it works: Immediately after the 1st-hour candlestick closes either below or above the 21 EMA (Exponential Moving Average), you place precise Buy/Sell limit orders. Once all parameters are meticulously set, you can confidently attend to your daily routine, including your day job, while entrusting the market to dictate the trades. If you are interested to learn my strategy, please visit my blogging site, link in BIO. Thank you!
OANDA:XAUUSDEducation
by Barry_Games_Trading
Mechanical Consistency; Gold (XAUUSD) Trade Review for 31 JulyHi, This is a trade review for 27 July 2023. Here are some details for the trades. XAUUSD 1-hour time frame 2% per trade 2 Solid Wins, net around +5.5% Disclaimer: Not Financial Advice! I'm just sharing my trading journey. Please take it as educational content. Thank you! Monday's trading was exceptionally successful with both trades yielding outstanding results. The first trade was executed flawlessly, experiencing minimal drawdown before quickly hitting its target for a satisfying profit. The second trade was triggered right after the first's successful exit and continued its momentum into Tuesday morning, reaching its initial take profit level. However, due to the potential impact of the ongoing trade on the new setup, I had to make a prudent adjustment to the second trade's take-profit level. As a full-time working individual, I do not have the time to constantly monitor the charts and look out for the "perfect" trading opportunity. This is why I adopt the mechanical trading strategy to earn extra money. This approach eliminates the need for extensive technical or fundamental analysis and removes any guesswork. It is a 100% Mechanical rule-based strategy, ensuring disciplined and consistent decision-making. Here's how it works: Immediately after the 1st-hour candlestick closes either below or above the 200 EMA (Exponential Moving Average), you place precise Buy/Sell limit orders. Once all parameters are meticulously set, you can confidently attend to your daily routine, including your day job, while entrusting the market to dictate the trades. If you are interested to learn my strategy, please visit my blogging site, link in BIO. Thank you!
OANDA:XAUUSDEducation
by Barry_Games_Trading
Mechanical Consistency Weekly Review; -2.2% Return.Hi, Here's a weekly trades review on my mechanical consistency strategy. Here are some details for the trades. XAUUSD 1-hour time frame 2% per trade 3 win, 4 lose; Net Lose -2.2% The week started out great but ends horribly after wiping out all my profit from Monday and Tuesday. Let's review each day. Monday's trade was executed beautifully, price went into profit almost immediately triggering the entry and reaches my first take profit soon after. After shifting stop loss to entry, the trade retraces back and just went I thought the trade was over. The price holds and triggered my Tuesday trade and head down to profit with close to zero drawdown, hitting all my take profit levels. Tuesday trade was cut short after taking profit 1 has been reached and hit my stop loss level at entry. But still it was a good trade! Wednesday trades ended net zero, the first trade lose immediately, hit my stop loss and triggered 2nd trade at the same time. Luckily, the 2nd trade is able to hit my first take profit level before going further up. Thursday is the most disappointing trades of the week, wiping out all my profit for this week. Because of the strong US data, Gold price fells sharply wiping all my trades within seconds. Friday did not trigger in any trades. Most because of my trade setup parameters. Even we ended up losing only -2.2% of the capital. I am still in profit for the entire month of July. I will be sharing monthly trades review soon. As long as we do not deviate from my mechanical strategy, we can and will still profit in the long run. Take it as an investment instead of day job. Disclaimer: Not Financial Advise, just sharing my trading journey. Please take it as educational content. Thank you! If you are interested to learn my strategy, please visit my blogging site, link in BIO. Thank you!
OANDA:XAUUSDEducation
by Barry_Games_Trading
Mechanical Consistency; Gold (XAUUSD) Trade Review for 27 JulyHi, This is a trade review for 27 July 2023. Here are some details for the trades. XAUUSD 1-hour time frame 2% per trade 3 lose, net -3R / -6% Due to the robust US data, Gold experienced a significant decline, resulting in a substantial setback. Unfortunately, all three of my carefully positioned mechanical trades ended up losing -3R, erasing all the profits I had accumulated this week. Nevertheless, dwelling on the past won't be productive. Instead, I remain committed to my strategy without any deviations or changes. It's worth noting that I've extensively backtested this consistent mechanical approach, and it has proven to be profitable over the past year. Moving forward, I am optimistic that the upcoming week will yield better results. Staying focused and disciplined will be key to achieving success. Let's look ahead with confidence and hope for a more favourable outcome next week! Disclaimer: Not Financial Advise, just sharing my trading journey. Please take it as educational content. Thank you! As a full-time working individual, I do not have the time to constantly monitor the charts and look out for the "perfect" trading opportunity. This is why I adopt the mechanical trading strategy to earn extra money. This approach eliminates the need for extensive technical or fundamental analysis and removes any guesswork. It is a 100% Mechanical rule-based strategy, ensuring disciplined and consistent decision-making. Here's how it works: Immediately after the 1st-hour candlestick closes either below or above the 200 EMA (Exponential Moving Average), you place precise Buy/Sell limit orders. Once all parameters are meticulously set, you can confidently attend to your daily routine, including your day job, while entrusting the market to dictate the trades. If you are interested to learn my strategy, please visit my blogging site, link in BIO. Thank you!
OANDA:XAUUSDEducation
by Barry_Games_Trading
Mechanical Consistency; Gold (XAUUSD) Trade Review for 26 JulyHi, This is a trade review for 26 July 2023. Here are some details for the trades. XAUUSD 1-hour time frame 2% per trade 1 win & 1 lose, net -0.2R (-$40) My mechanical strategy is still working as intended. Although the first trade ended up losing but the second trade manages to perform and reduce the overall loss to -0.2R. I am still confident that the strategy will work in the long run. Disclaimer: Not Financial Advise, just sharing my trading journey. Please take it as educational content. Thank you! As a full-time working individual, I do not have the time to constantly monitor the charts and look out for the "perfect" trading opportunity. This is why I adopt the mechanical trading strategy to earn extra money. This approach eliminates the need for extensive technical or fundamental analysis and removes any guesswork. It is a 100% Mechanical rule-based strategy, ensuring disciplined and consistent decision-making. Here's how it works: Immediately after the 1st-hour candlestick closes either below or above the 200 EMA (Exponential Moving Average), you place precise Buy/Sell limit orders. Once all parameters are meticulously set, you can confidently attend to your daily routine, including your day job, while entrusting the market to dictate the trades. If you are interested to learn my strategy, please visit my blogging site, link in BIO. Thank you!
OANDA:XAUUSDEducation
by Barry_Games_Trading
SUPPORT & RESISTANCE Hey Everyone, Support and resistance is one the most talked about price action component when it comes to technical chart analysis. What is support and resistance? Support and resistance are areas where price fails to continue to rise or drop. Historical areas of rejections create levels of support and resistance. These levels are expected to stop price from a continuation. - SEE EXAMPLE BELOW How can we use support and resistance? Support and resistance levels can be used to take trades from and to close trades on. We will cover the basics of drawing the levels and also identifying rejections and breakouts using support and resistance levels. First and foremost traders draw support and resistance in many different ways. We will cover one of the methods we use to support our signals and trades, which is called "CANDLE BODY CLOSE" See examples below on how to draw the levels, identify rejections and also the breakout strategy. CANDLE BODY CLOSE SUPPORT AND RESISTANCE Failure to close above a level with the candle body forms level of resistance and failure to close below a level with the candle body forms support. Also areas of rejections. CANDLE BODY CLOSE BREAKOUT A candle that is able to close above a resistance or below a support level with the body and not just the wick confirms a breakout of the level for a continuation. This is a fantastic simple way to chart support and resistance levels, that can also be used to support entries and exits by identifying the wick rejections and the candle body breakouts. As always, we will continue to share our chart ideas and useful educational tips for traders. Please don't forget to like, comment and follow to support us, we really appreciate it! GoldViewFX XAUUSD TOP AUTHOR
OANDA:XAUUSDEducation
by Goldviewfx
14
TOMMY XAU | BASIC MARKET STRUCTURE Good afternoon gold gang! Thought id jump on here to talk to you about basic market structure, as its the basis for any strategy and super important to learn. We can identify that the market moves 3 ways .. up trend down trend sideways (consolidation) I prefer to trade when the market is trending in either direction. I determine this by looking at the monthly and weekly candles. In a trending market, i am looking to identify areas that the market can reverse from. If we are making a higher high for example .. I can identify that price is likely to pull back down to the key level it started its ascent from. From there i can wait for confirmations on the lower time frame to take a trade in the direction of the trend. obviously this doesnt work everytime .. news etc .. but its always good to have it in the back of your mind the phase of the market you are currently in. you will find with my strategy .. that price will make new structure points around my key levels ( the ones i place on my chart) Hope this helps some of you out .. back to basics is sometimes the way to go if you are getting overwhelmed with information Have a great sunday and see you tonight for the outlook tommy
OANDA:XAUUSDEducation
by tommyXAU
2
💰 Exploring the Potential of Investing in Precious Metals.Throughout the ages, the allure of rare and captivating metals like gold, silver, platinum, and palladium has remained unwavering. Their scarcity, exquisite aesthetics, and enduring nature have made them objects of desire. While these metals are commonly associated with ornamental jewelry, their utility extends far beyond adornment, finding applications in various industrial and technological realms. Moreover, precious metals have long been regarded as a safeguard against inflation and a sanctuary for investors amidst economic upheaval. Consequently, the trading of these invaluable commodities has evolved into a pivotal component of the global financial landscape, witnessing the exchange of billions of dollars each passing day. In this exposition, we embark upon an exploration of the fundamentals of precious metals trading: the mechanisms at play, the influential factors shaping prices, and the diverse avenues through which investors can partake in this exhilarating and ever-evolving marketplace. The vast realm of metals is neatly divided into two distinct groups: ferrous and nonferrous. The former encompasses iron, manganese, and chromium, although experts occasionally question the inclusion of the latter metal. This classification extends to alloys containing elements from these primary ferrous metals. Understanding Precious Metals From an official statistical perspective, ferrous metals command an overwhelming share, reaching up to 90%. One would naturally assume that such metals enjoy significant demand on stock exchanges. However, in reality, a majority of transactions occur outside the realm of these exchanges, transpiring directly between buyers and sellers. Consequently, the ferrous metals market and its liquidity do not boast the most favorable conditions. Within this category, certain metals hold a prominent position in exchange trading, namely: gold, silver, platinum, palladium, copper, aluminum, zinc, and nickel. Amongst these, gold and silver reign as the favored choices among traders and investors. To comprehend the market of precious metals in its entirety, it is imperative to examine it through two essential lenses: the functional aspect and the institutional perspective. Ultimately, the market represents a harmonious amalgamation of diverse spheres, encompassing not only extraction, production, and processing but also the final sale to consumers. The price of precious metals is subject to the influence of various factors, encompassing: Supply and demand dynamics: The fundamental principles of supply and demand exert a significant impact on precious metal prices. Limited supply coupled with high demand typically drives prices upward. Economic indicators: Economic data, including inflation rates, interest rates, and GDP growth, can shape the price trajectory of precious metals. For instance, during periods of elevated inflation, investors often seek refuge in precious metals as a store of value, leading to increased demand and subsequent price appreciation. Geopolitical events: Geopolitical occurrences like wars, trade conflicts, and political instability have the potential to sway precious metal prices. When geopolitical tensions escalate, investors frequently turn to precious metals as a safe haven, fueling demand and subsequently driving prices higher. Currency fluctuations: Since the price of precious metals is commonly denominated in US dollars, fluctuations in currency value can impact metal prices. For instance, if the US dollar strengthens, precious metal prices may experience a decline as they become relatively more expensive for buyers using other currencies. Investor sentiment: The sentiment and outlook of investors can play a vital role in shaping precious metal prices. Bullish sentiment may lead to increased buying activity, resulting in price surges. Conversely, bearish sentiment may prompt investors to sell their holdings, leading to price declines. To summarize, the price of precious metals is influenced by a multifaceted interplay of factors, ranging from the core dynamics of supply and demand to geopolitical events and currency fluctuations. Investing in precious metals offers several avenues for investors to participate in the market. Here are three of the most popular approaches: Stocks: Investors can purchase shares in mining companies engaged in the extraction of precious metals like gold, silver, platinum, and palladium. The stock prices of these companies often correlate closely with the underlying metal's price, as their profitability is tied to production costs and market demand. Exchange-Traded Funds (ETFs): Precious metal ETFs enable investors to buy shares in a fund that holds physical precious metals, such as gold or silver. These funds aim to track the price movements of the respective metal, providing a convenient means of exposure to the market without the need for physical storage and transportation of the metals. Contracts for Difference (CFDs): CFDs are financial instruments that allow investors to speculate on the price fluctuations of precious metals without owning the physical metal itself. By entering into a contract with a broker, investors can buy or sell the metal at a predetermined price on a future date. CFDs are a more speculative approach, involving leverage and potentially significant losses if the metal's price moves unfavorably. The potential earnings from trading precious metals can vary greatly and are highly dependent on individual factors and market conditions. It's important to note that trading in precious metals can be subject to volatility and fluctuations, and there are no guarantees of specific earnings. While gold and silver have demonstrated a long-term upward trend, it is crucial to approach trading with realistic expectations. Over the long term, precious metals have historically shown the potential for favorable returns. However, short-term gains can be less predictable. It's important to have a long-term perspective and not expect significant profits within a short period. Patience and a strategic approach are key when investing in precious metals. It's worth mentioning that the scarcity of precious metals, especially gold, has a significant impact on their value. As the available supply diminishes over time while demand remains steady or increases, the price per unit tends to rise. This trend is driven by the basic principles of supply and demand. In summary, while precious metals can offer good returns over the long term, it's important to manage expectations and understand that substantial earnings may take years or even decades to materialize. Investing in precious metals offers both advantages and disadvantages. Here are the key pros and cons to consider: Advantages: Safe haven investment: Precious metals, particularly gold and silver, are often viewed as safe haven assets during economic uncertainty or market instability. They can act as a hedge against inflation, currency devaluation, and geopolitical risks. Diversification: Precious metals provide diversification benefits to an investment portfolio. They have a low correlation with traditional assets like stocks and bonds, which can help reduce overall portfolio risk and enhance stability. Tangible assets: Precious metals are physical assets that can be held directly, offering a sense of ownership and security for some investors. Having tangible assets can also provide a potential alternative during times of financial crisis or disruptions in the banking system. Disadvantages: Volatility: Precious metal prices can be highly volatile, experiencing significant price swings within short periods. This volatility can pose risks, especially for short-term traders or those seeking quick profits. Limited income potential: Unlike stocks or bonds, precious metals do not generate income through interest payments or dividends. Their value primarily relies on price appreciation, which may limit their long-term growth potential compared to income-generating investments. Storage and insurance costs: If investing in physical precious metals, storage and insurance expenses can add to the overall costs of ownership. Proper storage facilities and insurance coverage are necessary to protect the value of the assets, which can eat into potential returns. Market manipulation concerns: Critics argue that the precious metals market may be susceptible to manipulation by large players or governments, potentially leading to artificial price movements that may not reflect true supply and demand dynamics. It's important for investors to carefully weigh these advantages and disadvantages, taking into account their financial goals, risk tolerance, and the broader investment landscape. Consulting with a financial advisor or conducting thorough research is recommended before making any investment decisions in precious metals. Are Precious Metals A Good Investment For You? Determining whether precious metals are a good investment for you requires considering various factors such as your financial goals, risk tolerance, and investment timeframe. Here are some key points to consider: Diversification: Precious metals can serve as a valuable component of a diversified investment portfolio, as they often have a low correlation with other asset classes. This diversification can help mitigate risk and stabilize portfolio performance. Inflation protection: Precious metals are historically considered a hedge against inflation since their value tends to rise when the purchasing power of fiat currencies declines. If protecting against inflation is a priority for you, investing in precious metals could be advantageous. Volatility: It's important to recognize that precious metals can experience significant price volatility, which may not align with the risk tolerance of every investor. If you are uncomfortable with substantial price fluctuations, other investment options may be more suitable. Liquidity: Precious metals generally offer high liquidity, meaning they can be easily bought or sold on major exchanges. This accessibility allows for flexibility and quick access to funds when needed. Long-term perspective: Investing in precious metals, particularly gold, often yields gradual and steady returns over the long term. Patience is crucial when investing in these assets, as their growth tends to occur gradually rather than in short-term bursts. Considering these factors, it is recommended to conduct thorough research, assess your individual circumstances, and consult with a financial advisor before deciding if precious metals are a suitable investment for you.
OANDA:XAUUSDEducation
by FOREXN1
9
Target Reached! XAGUSD ReviewPrice reversed strongly from our resistance level to the support level at 22.20. But how did it happen? Join Desmond in today's analysis review to have a quick recap on the elements that led to this strong reversal. Please be advised that the information presented on TradingView is provided to FXCM (‘Company’, ‘we’) by a third-party provider (‘Name of third party provider). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Name of third party provider. The speaker(s) is neither an employee, agent nor representative of FXCM and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of FXCM or any form of personal or investment advice. FXCM neither endorses nor guarantees offerings of third party speakers, nor is FXCM responsible for the content, veracity or opinions of third-party speakers, presenters or participants. High Risk Investment Warning Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you. Forex Capital Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. FXCM EU LTD (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. FXCM Australia Pty. Limited (www.fxcm.com): ** Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763), please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com FXCM Markets LLC (www.fxcm.com): Losses can exceed deposits.
FX:XAGUSDEducation
by FXCM
The Dangers of Giving Up Too Soon on a Trading Strategy There are hundreds of different strategies to trade. Some of them are losing ones, some provide modest results and some strategies are very profitable. Novice traders often struggle to find the right strategy that suits their personality, financial goals and risk appetite. Unfortunately, they also tend to make some common mistakes that can undermine their performance and confidence. ❌ One of the biggest mistakes that they make in their search is that they give a strategy a very short trial period. It simply means that they are trying to assess the validity of the strategy, trading that for a very short time span (usually a day to a week). Please, realize the fact that the performance of the strategy can be measured only with extended backtesting - meaning that the strategy should be tested on multiple financial instruments and for a long period of time and applying multiple evaluation metrics. Moreover, if the strategy proves its efficiency on backtesting, it should be traded on a demo account at least 2 months before the valid performance can be calculated. ❌ Another common mistake is that many traders drop the strategy once it starts losing. And by losing, I mean just 2–3 trades in a row. Newbies are searching for the approach that never loses. They may even abandon a trading strategy once they catch JUST ONE bad trade. ✅ In contrast, a smart trader realizes that one bad trade does not define the performance of the strategy. Moreover, such a trader calmly faces the losing streaks and sticks to the strategy. Take a look at that picture. On the top, we have the traits of a newbie trader and his equity curve. He abandons the strategy after he faces the loss, not giving the strategy a chance to recover. When he changes the strategy, he starts recovering a little bit and a losing period follows. He drops a strategy again, and he keeps following this vicious cycle till his entire account is blown. On the bottom of the picture, we see the equity curve of a smart trader. Even though he faces losses occasionally, his strategy always gives him a chance to recover and with time his trading account steadily grows. Please, realize the fact that a perfect strategy does not exist. You will lose the money occasionally anyway. What distinguishes a smart trader from a dumb one is his discipline and trust to his trading system and willingness to face losses. ❤️Please, support this video with like and comment!❤️
FOREXCOM:XAUUSDEducation
by VasilyTrader
9
The Gold Standard and the Global Monetary SystemI. Introduction The history of international monetary systems has been a story of constant evolution. Of the many systems that have been used over the centuries, the Gold Standard stands out for its longevity and its critical role in shaping the world's economic landscape. This essay will first discuss the Gold Standard, then delve into President Richard Nixon's monumental decision to sever the tie between the U.S. dollar and gold, known as the 'Nixon Shock.' This discussion will segue into the subsequent transformation of the global monetary system, culminating in an analysis of our present-day monetary era. II. The Gold Standard Era The Gold Standard, which flourished between the late 19th century and the early 20th century, was a monetary system where the value of a country's currency was directly linked to gold. Each country promised to convert its currency into a fixed amount of gold upon demand. This system provided a stability that fostered international trade and investment, as it offered predictability of exchange rates and a constraint on inflation. However, it also meant that national monetary policies were subordinated to the need to maintain gold parity, thereby constraining a government's ability to respond to domestic economic conditions. III. Nixon's Depreciation and the End of the Gold Standard In 1971, amidst growing economic pressures, President Richard Nixon declared that the United States would no longer exchange gold for U.S. dollars held in foreign reserves, effectively ending the Gold Standard. This move was initially designed as a temporary measure to protect U.S. gold reserves, which were dwindling due to persistent trade deficits. However, the 'Nixon Shock' proved to be a permanent shift in international monetary policy. Nixon's move unshackled the U.S. dollar (and other global currencies) from the constraints of gold, allowing for more flexible monetary policies. This change allowed governments to respond more efficiently to economic downturns by manipulating the money supply. Yet, it also introduced a new era of exchange rate volatility and inflation risk, challenges that economies continue to grapple with today. IV. The Transformation of the Global Monetary System The end of the Gold Standard marked the transition to the era of fiat money—currency that is backed by the full faith and trust in the government that issues it, rather than a physical commodity like gold. Fiat money systems have provided governments with greater flexibility to manage economic conditions through monetary policy, as they can adjust the money supply to influence interest rates, manage inflation, stimulate growth, or address economic crises. However, the reliance on faith and trust in the government has also led to episodes of hyperinflation and economic crises in countries where that faith was misplaced or abused. V. The Present-day Monetary Era In the current monetary era, central banks, like the Federal Reserve in the U.S., use open market operations and other monetary policy tools to control the money supply and influence economic conditions. Decoupling from gold has also facilitated the rise of digital currencies and novel monetary ideas like cryptocurrency, reshaping our understanding of money and value. However, this freedom has its downsides; the absence of a physical constraint like gold can lead to fears about runaway inflation, especially in times of significant increases in the money supply, such as the response to the COVID-19 pandemic. VI. Conclusion The Gold Standard, Nixon's Shock, and the transformation of the global monetary system offer key insights into the strengths and weaknesses of different monetary systems. While the Gold Standard provided a stability that fostered international trade, it limited the ability of governments to respond to domestic economic conditions. The Nixon Shock and the transition to a fiat money system have provided greater flexibility, but also introduced new challenges in terms of inflation risk and exchange rate volatility. As we navigate our present-day monetary era, it is essential to remember the lessons of the past while staying open to new innovations and ideas in our ongoing quest to develop a monetary system that best serves the needs of society.
FX_IDC:XAUUSDEducation
by financialflagship
Exploring Leverage in Gold and Forex Trading 💰 Leverage is an essential tool in trading gold and forex. It enables traders to control larger positions with minimum initial capital. However, it also carries a high degree of risk as one can experience significant losses if the market moves against them. Here are some things to consider about leverage in trading gold and forex: • Leverage is the ratio of the amount one can borrow and the amount of capital invested. For instance, if a trader chooses a 50:1 leverage, then they can trade up to 50 times more than their initial capital. • While leverage allows traders to profit immensely from small market moves, it also magnifies losses if the market goes in the opposite direction. • Even experienced traders can fall prey to leverage's pitfalls, so it's crucial to understand the risks and manage them effectively. • Traders must calculate their risk-reward ratio before initiating a trade that involves leverage to help minimize losses and improve returns. • Stop-loss orders can help traders to manage their risk in case of unexpected market movements. • It is essential to have a solid trading plan that includes entry and exit strategies, trading goals, and risk management strategies. • Traders should choose a broker that offers favorable margin requirements and instant trade execution. In conclusion, leverage can be a useful tool in trading gold and forex, but it is not suitable for everyone. Traders must carefully evaluate their risk tolerance and have a well-defined trading plan before employing leverage. Please, like this post and subscribe to our tradingview page!👍
BITSTAMP:BTCUSDEducation
by EliteTradingSignals
4
My simple 1 minute strategy (tutorial) My super simple 1m chart hyper scalping strategy that has been killing it for the last couple of weeks .. enjoy. Whats up gold gang .. thought id hop on here with a tutorial on how i trade my key levels on the 1 min chart. Firstly, this is a no bias strategy .. so we can take buys or sells depending how price reacts at the levels. High volume is a must here so around market opens is best. 1. Let price hit the key level. 2. if price is breaking through, wait for a 1 min candle to close and enter in that direction. 3. 10 pip TP 10 pip SL (or as close to the top of the previous candle as possible) 4. SL to BE if you like and hold for runners to target. I like to come out fully at 1:1 5. reversals .. price must print a candle in the opposite direction engulfing the previous. Enter on the break of the previous. 1:1 thats it. Super simple. It sounds dumb and too good to be true but i have been collecting the data and its working so far. I cant post a chart example on the 1m time frame to show you but ill post elsewhere so you can see. Try it yourselves with low lot sizes and see how it works for you. If not, you can trade the way i normally do waiting for 30m candles to close in the zones. Have a great holiday weekend .. please like this and comment if you need further help. Dont forget to follow along for constant XAUUSD updates tommy
OANDA:XAUUSDEducation
by tommyXAU
8
My A+ Trade Set Up when trading XAUUSD (Educational)Whats up gold gang! .. thought id drop in to show you how i enter my trades when they enter my zones. I set alerts here on trading view, then when price is approaching my zone, i get to the computer and lock in Im looking for a clean break into the zone with a strong candle on the 15/30/1h That candle must close Next candle to open and do a small pull back to create a wick. This says to me no buying pressure is present. Entry on the flip of the candle and break of previous candle Target is placed. Stop loss above previous candle high. Anything above that is invalid. Of course i do things to manage risk and increase reward as the trade is moving, but they are personal to me. You will all have your own risk parameters im sure. Thats it gang .. very simple, but as you can see .. very effective. My zones work on any strategy, you could us smart money concepts, fibs, support resistance etc .. they will all work with my directional bias. Hope this was helpful .. leave a like if it was and follow along for more XAUUSD updates tommyXAU
OANDA:XAUUSDEducation
by tommyXAU
2
GOLD vs CRYPTOAre you an investor looking to make the best of your money? If so, you may be wondering if gold or cryptocurrency is the right investment for you. In this article, we will take a look at both gold and cryptocurrency and compare their pros and cons for investing. We will begin by defining and characterizing each asset, followed by examining the reasons to invest in them. Finally, we will provide a comparison of the pros and cons of investing in gold versus cryptocurrency, helping readers make an informed decision on which asset to invest in. So let’s get started! Definition and Characteristics of GOLD Gold is a precious metal with a yellow hue that is used for jewelry and coins. Its chemical element is Au (Aurum), and has an atomic number of 79. Gold is a soft metal, with a melting point of 1064.43 degrees Celsius, making it relatively easy to work with when crafting into jewelry or coins. It also has the distinct advantage of being chemically inert, meaning it resists corrosion and tarnishing over time, which allows it to retain its original beauty even after years of use. The price of gold can be influenced by many factors, such as supply and demand in the market, as well as geopolitical events. For example, when there are wars or political unrest in certain regions of the world, investors tend to flock to gold as a safe haven asset which drives up the price due to high demand. Conversely, when markets are stable and economies are doing well, investors may prefer other assets such as stocks or bonds since they provide higher returns than gold does during these times. Furthermore, changes in technology can influence the price of gold; if there is an advancement that makes extracting gold easier or more efficient then this may result in lower prices for consumers due to increased supply. In conclusion, gold has stood the test of time as one of the most valuable commodities on earth thanks to its characteristics such as its yellow hue, softness and resistance against corrosion and tarnishing. Additionally, its price can be influenced by various factors such as supply and demand in the market or geopolitical events. Investors should take all these factors into consideration before deciding whether or not to invest in gold. Reasons to Invest in GOLD Gold has been a reliable source of currency and value for centuries, making it a desirable option for those interested in diversifying their portfolios and protecting their wealth. With its intrinsically high liquidity, gold is also an excellent safe-haven asset that can provide stability in times of economic or political unrest. Additionally, gold often does well during periods of high inflation, providing investors with the means to safeguard themselves from financial losses in volatile markets. Moreover, gold offers diversification benefits due to its low correlation with other assets such as stocks and bonds. This allows investors to spread out their risk across different types of investments while still maintaining strong returns on investments. The convenience to buy and sell gold quickly makes it an attractive asset for those seeking rapid access to cash without having to divest from other holdings first. Furthermore, gold's accessibility makes it suitable for all kinds of investors regardless of budget size or experience level. There are many ways one can invest in gold including physical bullion coins, ETFs (exchange traded funds), or even owning stock in companies involved with mining or processing precious metals such as gold and silver. All these factors make investing in gold a viable choice for anyone looking for long-term portfolio growth and protection against market volatility. Definition and Characteristics of CRYPTO Cryptocurrency is a digital or virtual currency that is secured by cryptography, making it nearly impossible to counterfeit or double-spend. It uses decentralized control, with no central authority or government controlling it. Cryptocurrency transactions are secure and anonymous, making them attractive to investors who value privacy. The most popular cryptocurrency is Bitcoin, created in 2009. Other cryptocurrencies use blockchain technology and are often referred to as altcoins. Blockchain technology provides a secure and transparent way of storing transaction records which cannot be modified or tampered with. Transactions are also processed quickly and securely due to the distributed ledger system used by many cryptocurrencies. Cryptocurrencies have several unique characteristics that make them an attractive choice for investors. They are highly liquid assets as they can be bought, sold, and exchanged for other currencies at any time of day. They also have low transaction costs compared to traditional payment methods such as credit cards and bank transfers. Additionally, since cryptocurrencies are not tied to any country’s economic conditions or policies, they provide greater stability than fiat currencies can offer in times of economic unrest or political turmoil. However, there are some drawbacks associated with investing in cryptocurrencies that should be taken into account before investing in them. Cryptocurrencies are highly volatile assets due to their speculative nature; prices can rise and fall sharply at any time without warning as traders attempt to profit from short-term price movements rather than long-term trends. Additionally, cryptocurrency exchanges do not offer the same level of consumer protection as traditional financial institutions; if you invest in a cryptocurrency exchange you should ensure it has sufficient security measures in place before entrusting it with your money. Finally, because of their pseudonymous nature – meaning users’ identities remain anonymous – cryptocurrencies can be used for illegal activities such as money laundering which could put off potential investors from entering the market altogether. Reasons to Invest in CRYPTO Cryptocurrency has become an increasingly sought-after investment option due to its unique properties. Decentralization of the network allows users complete control over their funds and transactions, making it more secure than traditional methods. Low transaction costs and fast processing times give cryptocurrencies an edge in terms of efficiency compared with other payments systems. By investing in crypto, investors can diversify their portfolios and reduce the risk of market volatility associated with physical commodities like gold or silver. Moreover, depending on timing and individual decisions, cryptocurrency can offer high returns; many digital coins have seen huge gains due to their limited availability and strong demand. Finally, there is potential for impressive capital appreciation in cryptocurrency due to its global acceptance and capacity for growth. Open markets around the world make price movements accessible at any given time - allowing savvy traders to capture profits from various markets if managed correctly. As a relatively new form of investment asset, those who choose to invest early are presented with greater opportunity for growth compared to other options available. In summary, investing in cryptocurrency provides investors with a range of advantages that could lead to long-term portfolio growth or protection against inflationary risks. As such, it is important that all prospective investors conduct thorough research before committing funds into this asset class as there are both risks and rewards involved in this type of investment. Comparative Pros and Cons of Investing in GOLD vs CRYPTO Weighing up the pros and cons of investing in gold or cryptocurrency is a key factor to consider when it comes to making an informed decision on which asset type would best suit one's individual needs. Gold has traditionally been seen as a reliable source of currency and value, offering stability during times of economic or political unrest. Additionally, gold provides diversification benefits due to its low correlation with other assets while also having high liquidity and accessibility for all types of investors. Conversely, crypto investments have become increasingly popular due to their unique properties such as decentralization of the network, low transaction costs, fast processing times, and potential for high returns. Investing in cryptocurrency can help diversify portfolios and reduce risk associated with market volatility; furthermore, crypto is not affected by inflationary pressures like gold is. However, it's important to be aware that both gold and cryptocurrency have their own set of drawbacks that should be factored into any investment decision. For example, gold prices are more volatile than cryptocurrencies but also more stable over long periods of time; additionally, gold has higher liquidity than crypto meaning it’s easier to liquidate investments quickly if needed. Ultimately investors should conduct thorough research into both asset types before deciding which will best meet their own personal goals when investing money. By being aware of the advantages and disadvantages outlined here they will be able to make an educated choice when selecting either gold or cryptocurrency as part of their portfolio. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
OANDA:XAUUSDEducation
by Lingrid
6
TommyXAU Educational - What i mean by clean rangeGood afternoon gold gang, hope you're having a good weekend. I thought id hop on to share with you a piece of information of what i mean by clean range. Ok .. Say you have 2 key levels in price .. we have had a big news event causing a big red candle to the left hand side. This has left what is called an imbalance. An imbalance is where the wicks of the previous and after candle don't meet. Backtest that one yourself and see how many times these imbalances get filled. Price is coming back up and closes above the key level .. it is now a high probability that price will come up and fill that imbalance and the clean range. I call it clean as there is no traffic or hurdles that should stop price on its way up. Again, adding to the probability. Simple as that really guys .. Please leave a like if it was of any help to you and ill see you this evening for market open! TommyXAU
OANDA:XAUUSDEducation
by tommyXAU
3
How to Build Wealth (Even During Monetary Tightening)One question that many investors are asking right now is: How can I build wealth during monetary tightening? To answer this question, one must understand how the money supply works. The Money Supply The money supply refers to the total amount of currency held by the public at a particular point in time. M2 is one of the most common measures of the U.S. money supply. It reflects the amount of money that is available to be invested. M2 includes currency held by the non-bank public, checkable deposits, travelers’ checks, savings deposits (including money market deposit accounts), small time deposits under $100,000, and shares in retail money market mutual funds. The chart above is a time-compressed view of the money supply. The time scale has been compressed such that the money supply appears as a vertical line with clusters of dots. Each dot represents a quarter (or 3-month period). During periods of monetary easing, when the central bank accelerates increases in the money supply, the dots stretch wider apart, as shown below. During periods of monetary tightening, when the central bank decelerates increases in the money supply, the dots tighten together. In rare cases, the central bank can reduce the money supply to fight inflation, in which case the dots can retrograde. The central bank rarely reduces the money supply because it usually results in economic decline. The Money Supply and The Stock Market Since the money supply reflects the amount of money that can be invested in the stock market, the stock market tends to track the money supply. As the money supply (M2SL) grows so too does the stock market (SPX). The chart above shows that despite the stock market’s oscillations, over the long term, the growth rate of the stock market tends to track the growth rate of the money supply. The stock market goes up, in large part, because the money supply goes up. The chart below is from the book Stocks for the Long Run by Jeremy Siegel, Professor of Finance at the Wharton School. The chart shows that compared to other asset classes, stocks generally perform the best over time. Stocks generally perform the best over time because the growth rate of the stock market generally tracks the growth rate of the money supply fairly well. Investing in the stock market is therefore an efficient means of preserving wealth over the long term. One will always be better off investing in assets that grow in price at a faster rate than the rate at which the money supply grows than investing in assets that do not. When the money supply decreases during periods of monetary tightening, as is happening right now, only assets that outperform the money supply can produce positive returns. Knowing these facts, we can reach the following conclusion: Generally, investing in the stock market does not intrinsically build wealth, it merely efficiently preserves wealth over time against the perpetual erosion of an ever-increasing money supply. To build wealth one must invest in assets that grow in price faster than the rate at which the money supply grows . Preserving Wealth vs. Building Wealth As noted, to build wealth one must invest in assets that move up in price faster than the rate at which the money supply moves up. Investing in assets that move up in price over time, but at a rate less than that which the money supply moves up over time may seem like a good investment to an investor if the investor is making money, but such investments are not typically wealth-building. These investments are merely some degree of wealth-preserving. When the price of an investment increases over time at a rate less than the money supply, that investment causes a loss of wealth, despite giving the investor the perception of increased wealth. A loss of wealth occurs because the investor’s purchasing power is decreasing over the period of time which the investment is held. Purchasing power is the value of a currency expressed in terms of the number of goods or services that one unit of money can buy. It can weaken over time due to inflation. To keep things simple, let’s assume that other elements of inflation, such as money velocity, remain fairly constant and that an increasing money supply is the main cause of inflation. Let’s consider some case studies. Case Study #1: REITs Suppose an investor, John, invests his money in real estate investment trusts (REITs), specifically BRT Apartments Corp. John is a smart investor and does research before investing. In his research, he sees that BRT has decent profitability and a fair valuation. He also sees that BRT has decent growth potential. After analyzing fundamentals, John does technical analysis. He sees the below chart which shows a decades-long bull run. (Chart has been adjusted to include dividends) He thinks to himself: This asset is a money maker. Despite periods of corrections, price generally goes up over time. John then buys shares of BRT as part of a long-term investment strategy. John has done his due diligence and indeed he is right that, over the long term, his investment is likely to make quite a bit of money. However, if John invests in this asset, although he will make money, he will lose wealth or purchasing power. That’s because the Federal Reserve is increasing the money supply at a rate that is faster than John’s investment grows. Here’s a chart of BRT adjusted for the money supply (and adjusted to include dividends). Adjusting the price of BRT by the money supply shows a clear downtrend over time. This means that while BRT is growing in price and its investors are making money, BRT’s investors are generally losing purchasing power over time by investing in this asset because the central bank is increasing the money supply at a faster rate than the rate at which BRT's price grows. By increasing the money supply exponentially over time, central banks trick people into believing that they are building wealth by investing when in fact most investments are, at best, some degree of wealth preserving. Only a minority of assets outperform the money supply, and usually, that outperformance is temporary. In the era of monetary easing, during which central banks drastically increased the money supply using various monetary tools, perceived wealth skyrocketed. However, actual gains in purchasing power or improvement in living standards, as measured by increased productivity, largely did not occur. You may be thinking that I simply chose a bad investment to demonstrate my point. While BRT is actually a great investment relative to most other assets, let's move on to the second case study: an asset that has skyrocketed in price in recent years. You will find that even for assets that have outperformed the growth in the money supply, the period of outperformance is usually temporary. Case Study #2: Microsoft (MSFT) Microsoft is an example of a stock that has outperformed the growth rate of the money supply in recent years. Below is a chart of MSFT adjusted for the money supply. The chart shows that although the growth in MSFT's price generally outperforms the growth rate of the money supply, it undergoes prolonged periods of underperformance when investors can lose wealth. This wealth loss effect cannot be fully ascertained by looking only at a chart of just MSFT's price. It only becomes fully apparent when one compares the stock's price to the money supply. Tech stocks have generally outperformed the money supply since the Great Recession. They were excellent wealth-building investments. However, now that the central bank has begun monetary tightening, interest-rate-sensitive tech stocks are especially likely to decline. Investing in these assets while the money supply is decreasing, and while interest rates are surging, may result in loss of wealth. Case Study #3: Utilities (XLU) The chart below shows how well the utilities sector performed over the past two decades. Let’s adjust the chart to the money supply. (See chart below) You can see that XLU moved horizontally relative to the money supply, meaning that it merely preserves wealth to varying degrees but does not generally build wealth over the long term. By including the money supply in our charts, we remove the confoundment of monetary policy and elucidate the true intrinsic growth potential of assets. Case study #4: ARK Innovation ETF (ARKK) Look at the chart below which shows ARK Innovation ETF (ARKK), managed by Cathie Wood, relative to the money supply. Cathie Wood’s investment choices have actually caused a loss of wealth since the fund’s inception in 2014. You can see in the above chart that price is slightly below the center zero line, which means that wealth has been lost by those who invested in ARKK in 2014 and held continuously to the current time. Finally, check out the below chart of SPY relative to the money supply. The entire post-Great Recession bull run in SPY was merely a recovery of the wealth lost since the Dotcom Bust, over 2 decades ago. The stock market is ominously again being resisted at this peak level. The below chart shows that the stock market has given back much of the wealth built since the pre-Great Recession peak. In summary, wealth-building requires investing in assets with a growth rate that is greater than the growth rate of the money supply. To accomplish this, an investor should compare an asset against the money supply before choosing to invest. Assets that continuously outperform the money supply over the long term are better investments than those that do not. One can use standard technical analysis on the ratio chart to determine candidates that are most likely to outperform the money supply. In the face of high inflation, central banks must reduce the money supply. A decreasing money supply pulls the rug out from under the stock market. When the money supply is falling, corporate earnings and the stock market typically fall as well. Inflation When the COVID-19 pandemic hit, the Federal Reserve and central banks around the world increased the money supply by an unprecedented amount. Throughout the course of its entire history up until the pandemic, the U.S. money supply moved up predictably within a log-linear regression channel, as shown in the chart below. Before the pandemic, the log-linear regression channel had an exceptionally high Pearson correlation coefficient (over 0.99), which suggests that the regression channel was reliably containing the money supply’s oscillations over time. When the pandemic hit the global economy came to a halt. The Federal Reserve increased the money supply by a magnitude that was so astronomical that it went up vertically even when logarithmically adjusted. (See the chart below) As a thought experiment, let’s assume that the log-linear regression channel above is valid and that data are normally distributed (typically they are not in financial markets). If it were the case that such a sudden, astronomical increase in the money supply occurred totally randomly, the event would be a 10-sigma event (meaning 10 standard deviations away from the mean). The chance of such a rare event happening totally randomly is so small that it would occur about once every 500,000 quadrillion years. Since this is much longer than the age of the known universe, a 10-sigma event is essentially equivalent to an event that will statistically never happen. Thus, no one was prepared for the action that the Federal Reserve took. By exploding the money supply by this extreme amount and flooding the market with so much newly created money, central banks instantly made everyone feel wealthier by giving them more money, but this action would eventually make everyone less wealthy by destroying their purchasing power as inflation ensued. Once high inflation begins, it can be hard to stop. When inflation stays high for too long the public begins to expect more of it. The public then alters its spending and saving habits. The public also begins to demand higher wages to keep up with high inflation. This creates a negative feedback loop: When workers receive higher wages to keep up with inflation, workers can afford to pay inflated prices which keeps inflation higher for longer. As workers get paid more, keeping demand high, companies also charge more for their goods and services. Eventually, workers again demand higher wages to keep up with yet even higher prices. At every stage of inflation, the best strategy for central banks is to downplay its true severity. This is because the easiest way to control inflation is by managing the public’s perception of it. The hard way to control inflation is to raise the cost of money – interest rates – which in turn induces economic decline, and which can cause financial crises as highly indebted consumers, companies and governments cannot afford higher interest payments. Bonds Government bond yields reached a record low during the COVID-19 pandemic. The chart below shows that interest rates – or the price of money – reached their lowest level in the nearly 5,000 years for which records exist. Since the start of 2022, interest rates have surged higher, breaking a multi-decade downtrend, and ushering the market into a new super cycle where interest rates will likely remain higher for the long term. Interest rates and the money supply are inextricably linked. Few people know why an inverted yield curve predicts a recession. An inverted yield curve reflects the destruction of money. When the yield curve is inverted, banks can no longer profitably borrow at short term rates and lend at long term rates. Bank lending creates the most amount of money. An inverted yield curve is a market perversion that does not occur naturally but occurs only through central bank action. Inverting the yield curve is a highly obfuscated tool that central banks use to decrease the money supply. Furthermore, as we discussed before, since the stock market generally tracks the money supply, an inverted yield curve is a warning that the stock market will fall in the future. Recently, the yield curve (as measured by the 10-year minus the 2-year U.S. treasury bonds) inverted by the most on record. Below is the chart of iShares 20+ Year Treasury Bond ETF (TLT). TLT tracks an index composed of U.S. Treasury bonds with remaining maturities greater than twenty years. As you can see from the chart above, which excludes the past two years, it looks like TLT has been a great investment over the past two decades. (For this chart, I included dividends. TLT pays out dividends that derive from interest payments on its bond holdings.) Look at the chart below to see what happens when we adjust the chart for the money supply. In the chart above we see that since its inception TLT moved horizontally relative to the money supply. What this means is that holding TLT over this period was not wealth-building, but it was good at preserving wealth. Its price moved up in perfect lockstep with the money supply. Now, let’s see how TLT performed in the past two years. As we see in the chart above, until 2021, an investor who held long-term U.S. government bonds would have been preserving their wealth and shielding it from the erosion of perpetual increases in money supply. However, as interest rates on government debt surged higher as central banks fight high inflation, bond investors are now seeing major wealth destruction. In a stable monetary system, investing in government bonds should preserve wealth, since if it fails to do so, no one will buy bonds to finance the government. The situation is also concerning when we examine investment-grade corporate bonds (LQD) relative to the money supply. This chart of investment-grade corporate bonds adjusted for the money supply shows that we should be concerned about the current state of even the most high-grade corporate bonds. We see that the value of investment-grade corporate bonds over time, inclusive of their interest payments, has fallen off a cliff relative to the rate at which the money supply is increasing. This chart suggests that those who invested in corporate bonds have recently lost a lot of wealth. Until the current trend reverses, who would want to invest in corporate bonds? This is a problem for corporate finance. Below is a chart of high-yield corporate bonds (HYG), (which are riskier than investment-grade corporate bonds), as compared to the money supply. You can see from the chart above that all the wealth built by investing in high-yield corporate bonds since the Great Recession has been completely wiped out. What I am about to explain next will be somewhat dense. Look again at the two charts below which show investment-grade corporate bonds relative to the money supply and high-yield corporate bonds relative to the money supply. Recall that bond prices move inversely to bond yields. Thus, if we flip these charts of corporate bond prices, we will get corporate bond yields relative to the money supply. Now let’s think. These charts show that the yields on corporate bonds are moving up faster than the supply of money. Corporate bond yields reflect the amount of money that corporations must pay on their debt. In other words, the amount of money that corporations will have to pay to service their debt is moving up faster than the money supply. As noted previously, the money supply speaks to corporate earnings since corporations can only ever earn some subset of the total supply of money in the economy. Thus, if the money supply decreases, as it is now, corporate earnings will likely decrease as well. If the interest on corporate debt is moving up much faster than the money supply, and the money supply which reflects corporate earning capacity is decreasing, what might this say about the future? Mortgages In the chart below, I analyzed the current median single-family home price in the United States adjusted by the current average 30-year fixed-rate mortgage (as a percentage). I then compared this number to the money supply. This chart gives us a sense of whether or not the Federal Reserve is supplying enough money to the economy to support the current expense of home ownership. As you can see, price is rapidly approaching the upper channel line (2 standard deviations above the mean), which signals that home ownership is the least affordable it has been since the early 1980s – the last time the upper channel line was reached. If one believes that the 2 standard deviation level is restrictive, then one may conclude that there is not enough money being supplied by the Federal Reserve to sustain such high home prices as coupled with such high mortgage rates. If the Federal Reserve does not pivot back to a less tight monetary policy soon, then there is a high probability that a housing recession will occur in the coming years. Perhaps what is more alarming is the below chart, which shows the EMA ribbon. The EMA ribbon is a collection of exponential moving averages that tend to act as support or resistance over time. When the ribbon is decisively pierced it reflects a trend change. We can see in the above chart, that for the first time since the mid-1980s, we have pierced through the EMA ribbon. This could be a signal that a new super cycle has begun, whereby a higher interest rate environment will persist alongside high inflation for the long term, potentially making homes less affordable for the long term. This is one of many charts that seem to validate the conclusion that inflation will remain persistently high for the long term. Commodities In the below chart, the price of commodities is measured as a ratio to the money supply. This chart informs us that commodity prices have broken their long-term downward trend relative to the money supply. The chart above shows commodities as a ratio to the money supply side-by-side an inverted chart of the S&P 500 as a ratio to the money supply. It appears that the ratio of commodities to the money supply reflects an inverse relationship to the S&P 500 and the money supply. Think about what these charts may be indicating. Could they suggest that in the face of a shrinking money supply, more money will flow out of the stock market into increasingly scarce commodities? In a deglobalizing world facing conflict, climate change, and declining growth in productivity, it’s unlikely that commodity prices will return to the extremely undervalued levels seen in 2020. One commodity, in particular, deserves its own discussion: Gold. Gold During a monetary crisis, the usual winner is physical gold. Since the dawn of human civilization, gold has played an important role in the monetary system. As a scarce commodity gold is often perceived as inherently valuable. In his 1912 book, The Theory of Money and Credit, Ludwig von Mises theorized that the value of money can be traced back ("regressed") to its value as a commodity. This has come to be known as the Regression Theorem. Once paper money was introduced, currencies still maintained an explicit link to gold (the paper being exchangeable for gold on demand). However, the U.S. abandoned the gold standard in 1971 to curb inflation and prevent foreign nations from overburdening the system by redeeming their dollars for gold. Currently, gold is extremely undervalued when priced in U.S. dollars. The current fair dollar-to-gold ratio is currently about $7,200 per ounce of gold. This number is produced by dividing the year-to-year increases in the money supply by the yearly production of gold in ounces. Eventually, a monetary crisis will occur, and according to Exter’s Pyramid, investors will scramble for gold, which may force fiat currency to regress back to a gold standard to stabilize markets. Bitcoin In this final part, I will give a few thoughts on Bitcoin, as it relates to the money supply. Below, you will see that when charted as a ratio to the money supply, Bitcoin formed a nearly perfect double top in 2021. This chart could have warned traders that Bitcoin had topped in November 2021 given Bitcoin's inability to achieve a new high relative to the money supply. This shows that one can use the money supply in their charting as an additional layer of technical analysis. In the below chart, we see how Bitcoin's market cap is moving relative to the U.S. money supply. Bitcoin’s yearly chart is a bull flag relative to the money supply. There are very few assets outside of the cryptocurrency class that present as a bull flag relative to the money supply on their yearly chart. What might this chart reveal about Bitcoin's tendency to disrupt central banks' ability to conduct monetary policy? The Federal Reserve’s inability to stop people from converting dollars into Bitcoin to store wealth is a problem that will likely result in Bitcoin and other forms of decentralized finance coming under the greater scrutiny of the U.S. federal government. In the future, I plan to write a post on investing in cryptocurrency. In that post, I will explore Bitcoin and blockchain technology in much greater depth. Final thoughts To build wealth one must invest in assets that grow in price faster than the money supply erodes purchasing power. To become a successful investor, one must revolutionize one’s perception of money and understand that cash – or central bank notes – are worth nothing more than the belief that the government will persist and remain solvent. To build wealth an investor’s goal should not be to make as much cash as possible, rather an investor’s goal should be to convert cash into assets that grow faster than the money supply and to accumulate as much of such assets as possible.
FRED:M2SLEducation
by SpyMasterTrades
48
How Much Gold Does Your Portfolio Need?Economists make forecasts to make weathermen look good. Trying to forecast trends in complex systems is never easy. As with weather, financial markets are influenced by a myriad of factors which can make prediction akin to gambling. Time in the market beats timing the market so a far safer bet is building a diversified and informed portfolio. As mentioned in our previous paper , gold is a crucial addition to any well-diversified portfolio. Gold offers investors the benefits of resilience during crises, diversification, and low volatility while also being a good hedge against inflation. With crisis ever-present, from pandemics and geo-political conflict to financial instability and recession, uncertainty is on everyone’s lips, including central banks which bought a record 1,135 tonnes of gold last year. Central Banks have shown no signs of slowdown going into 2023, buying 74t in Jan and 52t in Feb, the strongest start to central bank buying since 2010. It is clear why, with rising global inflation due to 2 years of unprecedented QE. A decade of cheap money has its costs which are coming back to bite both consumers and central banks. This is now being played with collapsing banks and crumbling businesses. Though governments may term these exceptions, they’re the inevitable consequence of hiking rates too fast. And even though inflation has now started to cool, it is proving stubborn and the risk of recession looms. In crisis, institutions and individuals rush to gold. It’s no wonder then that gold prices spiked in March nearing an All-Time-High above USD 2,000/oz. Gold continues to trade above the key 2000 level even in April. Even now crises show no sign of slowing. Recession talks have become commonplace and phantoms of 2008 haunt with bank collapses. The world is increasingly moving towards reshoring and friendshoring, and de-dollarization is talked about more and more. It is almost inevitable that gold will break its all-time-high soon. But, buying gold is the easy part, in fact, our previous paper covered 6 Ways to Invest in Gold. Managing gold as part of a larger portfolio is more nuanced. Allocating the right amount, finding the right entry, and knowing when to cash out are all critical. This paper aims to address two questions – 1. What are the key drivers of gold prices in this decade 2. How should investors use gold in balancing portfolios to navigate turbulent times? What Propels Gold After Its All Time High? SVB and Credit Suisse pushed it to its brink. In fact, spot prices in India, Australia, and the UK sailed even above their All-Time-High. But what propels gold now? Financial Instability Was Credit Suisse the End? “The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come.” - Jamie Dimon Unfortunately, Credit Suisse was likely just a symptom of the larger problem. 2-years of near-free money has inevitably led others to make risky bets which catch up to them during periods of QT. Additionally, Credit Suisse and SVB’s collapse were both set off by an unprecedentedly aggressive rate hiking cycle. Fed is stuck between a rock and a hard place as they try to control runaway inflation with aggressive rate hikes. Higher rates for longer increase the risks of financial instability. Stubborn Inflation and Recession Risks Stubborn inflation? Wasn’t inflation on its way down after almost a year? Yes and No. Although yearly inflation has definitely cooled in most countries from their peak last year, inflation continues to tick up month-by-month above the targets that central banks have set for themselves. It is not expected to reach below their targets even before 2025 in many countries. This is because although energy and commodity prices have cooled with demand waning, core inflation continues to remain stubbornly high. Additionally, food and energy prices are still volatile. On the back of this, recession risks remain high. Recently released FOMC meeting minutes showed that officials expect a recession in the second half of the year. A recession in many countries now seems inevitable. Gold shines during recession and high-inflation environments. High Interest Rates Wasn’t the Fed done hiking? Currently, CME’s FedWatch tool shows a ~72% chance of another 25bps hike next month despite the surprisingly low US CPI print. Does another 25bps matter? What’s more important is that 25bps is the peak rate and most central banks are calling this summit a pause and not a pivot. As such, rates will likely remain high for the remainder of 2023. Gold tends to perform well during high interest rate and risk-off environments. Escalating Tensions, Friendshoring, and De-Dollarization Last but definitely not least are central banks and their gold-buying binge. Though some of this can be explained by the ultra-high inflation. It is undeniably also driven by rising political tensions. The conflict in Ukraine continues to rage and the US extend its trade war against China with the CHIPS act. This is driving many of the largest economies to reshore and friendshore key supply chains. This also means relying less on the USD which can be weaponized by the US. De-dollarization has been underway for the last 23 years as the share of USD holdings in foreign exchange reserves has declined from 71.5% to 58.3% over the past 23 years. Current conditions make it more likely that the trend will accelerate. Gold inevitably benefits from all of this as it is one of the only assets that no other central bank can print or freeze. All of these factors will likely drive gold in the coming decade. But instead of setting a price target, investors can be prudent and methodical by properly allocating it as part of a larger portfolio. Using Gold in a Portfolio From 2000 until now, the following portfolios would deliver: Since 2000, gold has been the best performing asset out of the 3 main components of a basic portfolio – Large Cap stocks (SPY), Treasury Bonds (10Y), and Gold. Gold price has risen 609% compared to SPY at +193%. Investing in 10-year maturity treasury bonds would have netted investors 110% during these 23 years. As such, larger portfolio allocation towards gold would have yielded investors far more during this period. However, this comes at the downside of higher volatility. Gold has had an average 12-month rolling volatility of 15.8% over the last 23 years, slightly higher than SPY’s 14%. Still, not all volatility is bad, especially if the returns outweigh the risk. Volatility to the upside can be beneficial to investors. In order to measure the returns from the portfolio after accounting for higher volatility-associated risk, investors can measure the risk-adjusted returns using the Sharpe Ratio and Sortino Ratio. Sharpe Ratio measures the amount of excess return generated by taking on additional volatility-related risk. The higher the Sharpe Ratio, the better the portfolio is performing relative to its risk. The figure below contains the Sharpe Ratio for each of the portfolios across the last 23 years. Since each year had a different risk-free rate due to changing monetary policy, the Sharpe ratios vary for every year and there are periods during which gold-heavy portfolios have highest Sharpe ratios and others where it has the lowest. This highlights gold's sensitivity to changes in monetary policy. Sortino Ratio also measures risk-adjusted returns like the Sharpe Ratio however it only considers the risk of downside volatility. In other words, it measures return for every unit of downside risk. The figure below contains the Sortino Ratio for each of the portfolios. A key difference between the Sharpe and Sortino Ratios can be seen in the readings for 2009. Sharpe Ratio for a gold-heavy portfolio is the lowest in 2009 due to high volatility in gold prices. However, since this was volatility to the upside, the Sortino Ratio for a gold-heavy portfolio in 2009 is the highest. In 2023, a Gold heavy portfolio has performed the best and has the highest Sharpe and Sortino Ratio due to gold's relative overperformance amid the banking crisis. DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
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COMEX:GC1!Education
by mintdotfinance
4
XAUUSD How to enter on the retest (tutorial)Whats up gold gang! hope you have enjoyed your weekend .. its nearly market open .. so lets get ready. This weeks educational post is talking about the retest .. so what is a retest. When price breaks a banking level .. i normally enter on the break out .. but if i miss that .. you can wait for the retest. This is where price comes back to the level to collect more orders before shooting off in the direction of the current trend. Wait for a wick rejection at the banking level and a bullish candle to follow .. on the hour or 30m is the best .. then you can enter on the break of the previous bullish. Make sure this is at volume time around the opens. As anything .. it sounds simple .. but tricky to get right .. and is a lower probability set up compared to the standard breakout. Hope this was helpful guys .. please leave a like if you did. Ill be back tonight for the open and asian outlook going into tomorrow tommyXAU
OANDA:XAUUSDEducation
by tommyXAU
Producing Recurring Income in GoldGold has long been a darling of investors. Its holders - whether households or central banks - seek refuge in the yellow metal in times of crisis. Gold is a resilient store of wealth, offers durable portfolio diversification, exhibits lower volatility relative to equities & bonds, and serves as an inflation hedge. But it has a big downside. As mentioned in our previous paper , gold pays zero yield. Shares pay-out dividends. Debt earns interest. Property delivers rents. But gold? Zero! There are multiple methods of generating yield from gold. This paper illustrates a risk-limited, easy to execute, and capital-efficient means of producing yield by investing in gold. Innovation in financial markets enables even non-yielding assets such as gold to produce regular income. A class of derivatives known as call options can be cleverly deployed to generate yield. Call options are derivative contracts that allow its buyers to profit from rising prices of the underlying asset. When prices rise, call option holders earn outsized gains relative to the options price ("call premiums"). Unlimited upside with limited downside describes the call option holder's strategy in summary. What has that got to do with generating yield in gold? Everything. For every buyer, the market requires a seller. Options sellers collect call premiums which comprise the income. Many widely believe that options are weapons of mass wealth destruction. Not entirely wrong. Used poorly, options devastate investors' portfolios. Deployed wisely, options help astute traders to better manage their portfolio, generate superior yield on their assets, and construct convexity (disproportionate gain for fixed amount of pain) into their investing strategies. Fortunately, a covered call is a strategy which uses options prudently. As the strategy involves holding the asset whose prices are expected to rally, the risk of the strategy is hedged with risks well contained. Gold Covered Call involves two trades. A long position in gold and a short position in out-of-the-money gold calls. In bullish markets, investors gain from call premiums plus also benefit from increase in prices. Covered calls not only enable investors to generate income but also reduce downside risk if asset prices tank. A covered call trade in gold can be implemented in a margin efficient manner using CME’s Gold Futures and Options. A long position in CME’s Gold futures (“Gold Futures”) gives exposure to 100 troy ounces (oz) of gold per lot. Combining long futures with a short call option on Gold Futures at out-of-the-money strike allows investors to harvest premiums. Selecting an optimal strike and an expiry date is critical to successfully execute covered call strategies. First, Strike. It is the price level at which the call option transforms to be in-the-money. Strikes which have daily volumes & meaningful open interest enable options to be traded with ease and provide narrow spreads. Strikes that make options expire worthless benefits the covered call options holder. Second, Expiry. Options have expiry. Options sellers thrive on shrinking expiry for generating yields. Investors selling call options optimise their risk-return profile by selecting an expiry with higher implied volatility (IV). Option prices are directly proportional to IV. Higher IV leads to larger premiums enriching returns. SIMULATION AND PAY-OFF MATRIX This paper illustrates a covered call strategy in gold using the CME Gold derivatives market: 1. Long one lot of Gold Futures expiring in Oct (GCV3) at $ 2,050/oz. 2. Sell one lot of Call Options on Gold Futures expiring in Oct at a strike of $ 2,275 collecting a premium of $ 40/oz. The pay-off matrix simulates the trade P&L under four likely outcomes among many possibilities at trade expiry: a. Gold rises past the strike ($ 2,400): Options get assigned to the buyer. Covered call option holder incurs loss of $ 85/oz (=$ 2,400 - $ 2,275 - $ 40) from short call offset by profits from long futures ($ 350 - $ 85) = $ 265/oz. Each GC contract has 100 troy ounces of gold, so total profit will be $ 265 x 100 = $ 26,500. b. Gold rises but remains below the strike ($ 2,250): Options expire worthless to the buyer. Seller retains premium in full. Covered call option holder profits from long futures + call options premium ($ 200 + $ 40) = $ 240/oz. Each GC contract has 100 troy ounces of gold, so total profit will be $ 240 x 100 = $ 24,000. c. Gold price falls marginally below the entry price ($ 2,030): Options expire worthless to the buyer. Covered call option holder loses money from long futures and thankfully the loss is offset by call options premium (-$ 20 + $ 40) = $ 20/oz. Each GC contract has 100 troy ounces of gold, so total profit will be $ 20 x 100 = $ 2,000. d. Gold price falls ~5% below the entry price ($ 1,950): Options expire worthless to the buyer. Covered call option holder loses money from long futures and the loss is partially offset by call options premium (-$ 100 + $ 40) = -$ 60/oz . Each GC contract has 100 troy ounces of gold, so total loss will be -$ 60 x 100 = -$ 6,000. The chart below describes the pay-off from Gold Futures (Long position), Gold Call Options (short position) and Covered Call (combination of the two trade legs). MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
COMEX:GCV2023Education
by mintdotfinance
3
XAUUSD How to define the trend (educational post) Good afternoon gold gang! i hope you are all well and enjoyed your bank holiday weekend. This weeks educational post is based on trends and how to define them. The example above is of an up trend. You can follow this example in a down trend situation also, just in reverse. Ok so what do i look for .. on the 4hr chart .. im looking for my key levels as always. When price breaks a key level .. it will come back to retest it .. in normal market conditions. When price comes back to test it .. i am looking for price to respect that level by the way of a wick, and a close above it (in this case) .. this is where i can say the market has made a higher low and then to push on up to retest the previous higher high. In a case of the trend braking .. a change in structure .. i would like to see price at least break the previous key level (one below it) and then i can say the trend has changed. You can also take a trade at these levels .. after the retest. Just wait for a candle close confirmation after the liquidation wick and target the high/low. I hope this was educational to you, its very basic but its nice to go back and drill them from time to time. Stay tuned for market open updates guys .. until then .. please like this post and follow along for more XAUUSD updates. tommyXAU
OANDA:XAUUSDEducation
by tommyXAU
3