Gold Trading Beginner's Guide Part 2 - Learn Forex - FX Leaders

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Gold Trading Signals – A Beginner’s Guide, Part 2

Back to part 1 – Gold Signals a beginners guide.

Gold Trading

How to trade gold?

Gold can be traded in many ways. The most basic way is to buy physical gold, of course. Luckily, there are more advanced ways to trading gold nowadays which are much faster and cheaper. You see, if you buy physical gold like bars and coins, it’s normally more expensive because of its manufacturing costs. Some investors pay for safe storage of their physical gold, which in turn makes it more expensive. Besides these costs, it generally costs more to convert physical gold into cash than to liquidate an open (electronic) gold trading position.

How To Use Gold Signals

Trading the markets can be really tricky, especially if you’re new to the game. The great thing about using our forex, equity index, and commodity signals, is that you don’t need to do the hardcore analysis yourself.

We have a team of seasoned traders who constantly scan the markets for good signal trading opportunities. These traders are exceptional analysts with years of trading experience and an abundance of empirical knowledge of the markets.

You can easily utilize our profitable trading signals, which made an impressive 4,907 pips in 2016 alone! Of course, this incredible achievement was without the benefit of gold trading signals. To take your share of the profits, simply follow these steps:

Click on this link to go to our forex signals terminal. This is what the terminal looks like:

Gold trading signals 1

The terminal is divided into short-term and long-term signals

In the terminal you’ll see all the necessary information like the particular instrument (currency pair, equity index, or commodity), action (Buy or Sell), status (Get Ready, Active, or Closed), and the stop loss and take profit levels. Additional information is displayed in the comments column.

When the status flashes “Active” the signal is ready to be copied to your personal trading account.

You can open the trade at the market price with a pre-set stop loss and take profit according to the parameters of the signal. It’s always safer to at least set your stop loss before opening the trade. This is just in case a sharp market move suddenly moves against your trade before you can place your stop loss order.

Once the trade is open it will generally be closed automatically when the price reaches either the stop loss or the take profit.

In certain circumstances our analysts may close the position manually, in which case the following comment will appear in the comments box: “The signal was closed manually at xxx price”.

When the status flashes “Get Ready” our analysts are looking at a particular trade setup and are about to open a live signal.

This message gives you time to open up that particular instrument’s chart and order entry box while the analysts are going through their final checks.

If you would like to be notified as soon as a signal appears in the signal terminal, you can subscribe to our premium signals service. This will ensure that you never miss a winning trade. Notifications are sent to your mobile phone and via email. You will also get an audio cue on your computer to warn you of the trading opportunity.

This is just a brief guide on how to utilize our free and premium gold trading signals. For more details and information about our signal service program, please follow this link: How to Use Our Forex Signals.

Different Ways to Trade Gold

When it comes to trading gold electronically, there are a few different ways to do it, such as trading gold ETFs (exchange-traded funds), futures contracts on gold, gold options, and of course, gold CFDs (contracts for difference). Retail traders are mostly exposed to trading gold CFDs, so let’s briefly examine this topic.

Gold tradin signals 2

Trading gold signals online is cheap and easy.

The screenshot (above) of a forex trading terminal, displays the bid and ask prices of gold as well as the spread which is a minuscule 38 cents ($0.38) per one ounce of gold, in this case. Buying and selling physical gold is much more expensive than trading gold CFDs online. Of course, it is also less effective and carries more risk than trading gold signals online.

Trading Gold CFDs / Gold Trading Signals

Trading a contract for difference (CFD) on gold is not complicated. By buying or selling a gold CFD in response to one of our gold trading signals, you participate in the price movement of this precious metal without actually owning it physically. It’s traded exactly like a currency pair. The only difference is that you’re buying or selling gold against the U.S. dollar. The symbol for the gold CFD is usually XAU/USD. XAU is the gold component and USD the U.S. dollar component. When you believe the gold price will fall, you can sell this “pair”, and when you think the gold price will rise, you can buy it.

Of course, we offer the best gold trading signals, which makes trading this financial instrument a breeze.

Contract size

The smallest contract size you and I can trade on our standard forex trading platforms is normally one ounce. At the moment, the value of one troy ounce of gold is about $1250.

This sounds like a lot of money, but luckily you don’t need to put down the full amount to open one of our gold trading signals. In many cases, gold traders need less than ten dollars’ “margin” to buy or sell one ounce of gold. This will vary depending on the amount of leverage your broker offers. One of my trading brokers requires only $2.50 to open a one-ounce gold position.

Pip Value of Gold

Most brokers work on a $0.01 pip cost on gold. That means that for every pip the price moves, you will either gain or lose $0.01. But how many pips is a move of $1 in the gold trading price? Well, if you bought one ounce of gold, it means you will obviously make $1 if the gold price goes up with $1. If one pip is $0.01, then one dollar is 100 pips. Very simple.

Profit and Loss Calculation

As I just mentioned, a hundred pip move in the gold price will make a $1 difference in your gold trading account if you bought one ounce of gold. To calculate your potential profit on gold trading, simply multiply your position size by the distance to your target.

For example, if you bought 26 ounces of gold at $1255, and you have your take profit set at $1256.23, it means you’re targeting a gain of 123 pips. Multiply this by the number of ounces you bought: 123 pips X 26 ounces = 3198 pips. To convert this number to dollars, just multiply it by the pip cost of 0.01. So, 3198 pips X $0.01 pip cost = $31.98. This is your profit on 26 ounces of gold if you hit a profit target of 123 pips ($1.23).

It’s important to note that there’s a big difference between a gold trading pip and a pip in forex terms. The pip cost on the EUR/USD is $0.10. This means it is ten times the value of a pip when trading a gold signal. Thus, to make it easier to compare with the forex market, you can compare a 1000 pip move in gold to a 100 pip move in the EUR/USD.

This is important because it will make the transition when trading gold easier. For example, you might be accustomed to swing trading the forex market with a stop loss of let’s say 50 pips. Now if you set up a swing trade on gold, you could easily make the mistake of using a 50 pip stop loss because you’re used to doing it this way with forex.

If you make a mental note of multiplying your usual forex stop loss by 10, you won’t make the mistake of setting a stop loss on gold which is tighter than you actually intended it to be. Luckily, you won’t make any mistakes if you follow our incredible gold trading signals.

Instruments Correlated to Gold

Gold and Equities

Although it is commonly believed that gold trading is generally inversely correlated to stock markets, this is a dangerous assumption to build trading strategies on. Yes, trading gold would probably be a fantastic safe haven in the event of a major flight to safety.

If stock markets took massive hits sparked by fearful investors, this precious metal could be a great beneficiary, especially if the crisis or threat causing the selloff also affected the confidence in global monetary systems and subsequently, the confidence in major currencies.

However, there are numerous times when the stock markets and the gold trading price move in tandem. There are just as many times when they move in opposite directions.

Under normal market conditions, the positive or negative correlation of stocks to the gold price should not be relied upon as this could change at any time. In extreme situations, gold signals are expected to outperform equity index signals, though.

Major Economic Events Which Impact Gold Trading

There are many economic factors that influence gold’s trading price which include interest rates, inflation, gold supply and demand, the value of the U.S. dollar, and large gold transactions by central banks.

Although we have many members following our reliable gold trading signals, there is more than enough liquidity in the gold market to sustain all of these members’ trades, even if all the gold trading members pull the trigger simultaneously.

Economic events which move the gold price very abruptly, are typically events which cause substantial moves in the dollar. When the dollar suddenly spikes higher or lower, the gold trading price usually moves in the opposite direction. In this respect, gold acts like most of the major currencies (excluding the dollar).

Of course, certain economic indicators can also shock the gold trading price. For instance, if China were to release economic data which indicated a massive drop in the demand for raw materials needed for production, the gold price could make a substantial move lower. We have much experience in analyzing economic data, so you can rest assured that we incorporate not only technical analysis into our gold trading signals but also fundamental analysis.

Try our trading signals, this could be just the breakthrough you need!

That’s not all, though. We also have an amazing library of forex trading strategies related to forex trading, broker recommendations, and of course, our forex trading course.

What are you waiting for? Join the FX Leaders community now!

About the author

Skerdian Meta // Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.