Strategy › Forex Gold Trading Strategy

Forex Gold Trading Strategy

XAU/USD is an extremely volatile pair as Gold prices are affected by many different economic factors.
To domesticate this wild horse, binary options traders need a powerful trading technique which could define trading entries with high accuracy.
And, in our discussion today, “Gold Forex” system – a trend-following technical strategy developed only for trading the Gold – currencies - is the perfect candidate.
Let’s find out how to use this Gold digging tool.

How to trade Gold in Forex



Like most trend-seeking techniques, the Forex Gold Trading is composed of the world’s most popular lagging indicator - Moving Average.
Two Simple Moving Average lines (SMAs) are combined in this system.
The first SMA is established with the setting of 24 days, applied to determining trading occasions.
The other SMA, set with the period of 120 days, is responsible for highlighting tradable trends.
Despite not having a leading indicator to confirm trend’s momentum, this strategy still filters out wrong signals appearing in the Gold - crosses effectively because it’s developed for Gold trading purpose only.

Profiting from the Gold – crosses is not an easy work because Gold prices’ movement is based on not only the US Dollar fluctuation but also geopolitical developments.

During the period from March 2016 to March 2017, this technical strategy has shown an impressive win-rate - about 84%.
On average, there are 13 entries appearing every month.

How to profit using the Gold Forex Trading Strategies



This tool works best on the one-hour chart and is applied mainly to the XAU/USD pair.
After installing the built-in SMAs in the Finmax’s advance chart, you can start seeking for potential entries.

A bullish trading opportunity is determined when:

  • The 24-period SMA remains above the longer-term one.
  • Prices cross above the 24-period SMA.


Forex Gold Trading Strategy


Conversely, a bearish signal is identified when:

  • The 24-period SMA stays below the 120-period SMA.
  • Prices cross below the 24-period SMA.


Forex Gold Trading Strategy


There are some significant entering rules when trading with this system as follows:

  • Only one position should be entered at a time.
  • The cross-through candlestick must be fully closed before a signal is confirmed tradable.
  • The expiry time should be established ten times large the chart’s time frame. For example, you can set the finishing time to be 10 hours when trading on the one-hour chart.
  • Don’t enter the market when significant economic announcements related to the US economy are about to be reported since they can cause unexpected developments of the XAU/USD.

Pros and cons of the system



Pros

  • Easy-to-use.
  • Generating highly accurate trading signals by strict checking requirements.
  • Enabling traders to catch dozens of signals in long trends.
  • Not necessitating traders to constantly observe the trading platform.
Cons

  • Requiring a high level of patience.
  • Applied only to the Gold – currencies exchange.

Conclusion



Gold – crosses are the most difficult pairs to trade because of the unpredictable fluctuation in prices.
Nevertheless, the Forex Gold Strategy has shown itself to be an effective Gold miner with an impressive testing result in addition to plenty of large advantages.
We believe that using it along with price action knowledge will help you “dig” long-term and steady returns from the Gold – currencies.
Of course, don’t forget to apply risk controlling and psychology managing methods as they are indispensable tools in your trading career.


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