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Gold techniques, systems, and individual trades

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  • First Post: Edited Mar 24, 2010 3:29am Mar 22, 2010 3:25pm | Edited Mar 24, 2010 3:29am
I'm starting this thread so that myself and other gold traders can discuss techniques, systems, and individual trades that we make. I've been trading gold for almost a year and a half now. I started my trading career with currency pairs and soon realized that I could limit my losses and take better profits with the oldest currency of all—gold.

Without any further ado, I'll list my latest trade:

Inserted Code
I went short for 5 ounces of gold at 1130 on March 17th and just recently 
exited the trade at 1099 (March 22nd). I took 150 dollars worth of profit 
on this trade.
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Gold heading in direction I expected. Lets see if it hits the 1106 mark.
I would love to be a part of this coz' Gold as we know is quite stable. But, i've got no experience at all trading Gold. Maybe someone could help us newbies and show us the way. Is it in the same manner you trade any other currency pair. Happy to be a part of it. Thanks in advance and i would love to say, Very Nice Initiative for starting up this Blog. Cheers Mate!
Numbers NEVER Lie
Quoting ZizoFX
I would love to be a part of this coz' Gold as we know is quite stable. But, i've got no experience at all trading Gold. Maybe someone could help us newbies and show us the way. Is it in the same manner you trade any other currency pair. Happy to be a part of it. Thanks in advance and i would love to say, Very Nice Initiative for starting up this Blog. Cheers Mate!
There are lots of profits to be made on gold. In a nutshell, gold is traded just like any other currency pair. In most Forex consoles gold will appear as XAU/USD meaning that the quoted price, for example $1000 means that you can buy one ounce of the base (GOLD) with the quote currency (USD). Most accounts limit the leverage on gold trades--for example most currency pairs on my broker are 1:200 leverage, however GOLD requires a 1:100 leverage.

There are tons of books on trading gold including one of my favorites http://www.amazon.com/Gold-Trading-B.../dp/0471728004 which will give you a great introduction to gold trading.

One of the greatest benefits of trading gold exclusively is the ability to truly familiarize yourself with how it trades. Rather than trading 20+ currency pairs I've focused exclusively on gold and garnished an edge by becoming extremely comfortable with the peculiarities of how gold trades.

Trust me, if you start trading gold with a very good trading plan, and adhere to that plan, you will reap the benefits.

On a side note, my conviction that gold would rise from 1100 to 1106 was correct. Note, I didn't jump in this trade as it went against the overall trend. I'm waiting to see where gold goes from here, I don't have any bearish or bullish conviction at this point
Another important thing I forgot to mention:

You don't need to trade a lot, just trade smart.

Compulsive trading is a real killer. It was a big issue I had when I first started trading gold. I would get on the platform and almost always force myself into a trade. Now I've come to realize that there are sometimes periods of time lasting multiple days where I don't see exactly what I'm looking for. Even a successful trade made in haste that results in profit is a bad one in the long run as it supports a bad habit.
Alright, the seven period moving average on the one hour chart is about to move down through the fourteen period moving average. Also, the volume of tick movements seems poised for a large volume of movement. The one hour chart seems to be rounding out.

All of these indicate a bearish move.

I've gone short at 1105.90. The spread for all of my gold trades is $1 regardless of market conditions. I will stop loss if the sell price reaches 1110 and take profit when the seven period moving average on the one hour chart begins to move upward through the fourteen period moving average.

11:15PM PST
I rarely trade anything but XAU/USD these days. Perhaps I can join in on your thread when I have some analysis to offer?

To start, I have a short in at about 1100 on the bounce yesterday. Stop is at 1112 and I haven't determined the tp yet. Perhaps a bounce out of 1091 will force me to close the position. I have 100oz short. I've been shorting it since 1220 and will continue to do so unless things change significantly.
Quoting guitarjrb
I rarely trade anything but XAU/USD these days. Perhaps I can join in on your thread when I have some analysis to offer?

To start, I have a short in at about 1100 on the bounce yesterday. Stop is at 1112 and I haven't determined the tp yet. Perhaps a bounce out of 1091 will force me to close the position. I have 100oz short. I've been shorting it since 1220 and will continue to do so unless things change significantly.
Sounds great. I'm not sure where gold is going in the medium-term but it sounds to me like you're in a good trade right now. So, guitarjrb, what indicators do you use? I believe that using complicated indicators such as RSI and Stochastics will over complicate a trading system. I use two simple indicators—A fast and a slow moving simple average of 7 periods and 14 periods to help indicate a trend reversal and the volume or "tick fluctuation" indicator as it should really be called to also indicate a reversal. I used to use many other indicators, but I've found that nothing can replace your own mind and just a bit of simple math (averages and adding up tick movements). I also tend to trade on the one hour chart.

-----

On a side note I closed my SELL of gold at 1105.90 at 1096.80, taking $40.50 in profit.
Quoting speedster239
Sounds great. I'm not sure where gold is going in the medium-term but it sounds to me like you're in a good trade right now. So, guitarjrb, what indicators do you use? I believe that using complicated indicators such as RSI and Stochastics will over complicate a trading system. I use two simple indicators—A fast and a slow moving simple average of 7 periods and 14 periods to help indicate a trend reversal and the volume or "tick fluctuation" indicator as it should really be called to also indicate a reversal. I used to use many other indicators,...
I closed my earlier short, and am now short again from 1106.55 with a relatively tight stop at 1109.55. I occasionally use Ichi, but most(95%) of my trading comes from simple support/resistance/trendlines and price action. I don't see any useful movement, so i'm just scalping for a few dollars here and there until it breaks somewhere. I trade in 100oz blocks usually. If I feel spunky, i'll hit the market with 350oz. I'll join in on your thread and post my thoughts/charts as they may be useful. I also enjoy constructive criticism and hearing other points of view. I'll start posting charts and thoughts in realtime rather than after the thought....as speaking after the though is useless and nothing more than bragging. :-)
Quoting guitarjrb
I closed my earlier short, and am now short again from 1106.55 with a relatively tight stop at 1109.55. I occasionally use Ichi, but most(95%) of my trading comes from simple support/resistance/trendlines and price action. I don't see any useful movement, so i'm just scalping for a few dollars here and there until it breaks somewhere. I trade in 100oz blocks usually. If I feel spunky, i'll hit the market with 350oz. I'll join in on your thread and post my thoughts/charts as they may be useful. I also enjoy constructive criticism and hearing...
Great. I tend to find that complicated indicators can help, but they're misleading and can overcomplicated otherwise simple decisions. Chart patterns, moving averages and volume are straightforward and produce definitive results. Nothing, absolutely nothing, can beat simple calculations. After all, most price movement in the market is emotional.

My recent outlook attached.
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I created a more detailed graphic of my latest trade conviction. Three things will need to line up before I enter the trade. #1 is that the MACD is at about .7 and beginning to drop (indicating a bearish reversal). #2 is that the volume continues the pattern you see earlier in the chart where it forms a valley and activity subsequently picks up. #3 is that the 7 period moving average begins to move down into the slower 14 period moving average.

When all of these instances line up I will enter the trade. I'll post an update at that time on this thread.
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Sold 5 ounces of gold (.05 of a lot) at 1103.10. I will take stop loss if it reaches 1108 sell price and take profit when a trend reversal becomes apparent. All three indications I expected lined up as I posted previously.
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Closed the trade I was speaking about in the previous post at 1100.30 buy price for $14.00 profit. The trade ended up generally following what I expected but I did see a bit of hesitation (flat fast moving average) in the rounding out area that indicated a possible bullish take over after the next bearish run. I decided to play it safe and take profit while I had the opportunity. On top of that, it's time to go to bed.
Quoting speedster239
Closed the trade I was speaking about in the previous post at 1100.30 buy price for $14.00 profit. The trade ended up generally following what I expected but I did see a bit of hesitation (flat fast moving average) in the rounding out area that indicated a possible bullish take over after the next bearish run. I decided to play it safe and take profit while I had the opportunity. On top of that, it's time to go to bed.
Very nice trade...and very similar to mine! I closed out this morning when I woke up. I'll post my thoughts about today once I look over the chart a bit. I have a fibo drawn in which price action is bouncing between the 50 and 38.2 in which I have been scalping these levels.
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Quoting guitarjrb
Very nice trade...and very similar to mine! I closed out this morning when I woke up. I'll post my thoughts about today once I look over the chart a bit. I have a fibo drawn in which price action is bouncing between the 50 and 38.2 in which I have been scalping these levels.
Glad to see we're in the same boat. I took a look at the charts this morning and as suspected she road the bearish trend much farther downward than where I took profit last night. It would have been a nice ride but I'm still confident I made the right decision to take profits rather than a loss in an unsettling situation.

Also,
Are you trading a demo account or are you seriously well funded because you'd need to post like 55,000 margin for that trade?
I see an entrance for a buy right now at 1092.90 but I won't be taking it as it goes against the overall bearish trend on the one hour charts. The price should rebound from this mornings low to the 1102 or 1103 area. After it reaches this price, rounds out, and shows signs of another bearish reversal I'll hop on board again. I could take this trade right now but since I'm not 100% personally confident in what's going to happen I'll just sit and watch it out.
Quoting speedster239
I see an entrance for a buy right now at 1092.90 but I won't be taking it as it goes against the overall bearish trend on the one hour charts. The price should rebound from this mornings low to the 1102 or 1103 area. After it reaches this price, rounds out, and shows signs of another bearish reversal I'll hop on board again. I could take this trade right now but since I'm not 100% personally confident in what's going to happen I'll just sit and watch it out.
I can always be wrong, but i'm not feeling a long here. There is a quite defined H&S on the dailies, in which price has clearly broken the neckline. Also, the fibs I mentioned earlier....the 50 has been broken quite well and price is consolidating below the fib. Because of this, I have taken some shorts for the projected H&S target of around the mid to high 1060's.

EDIT: I should add that these are some large trades and I have plenty of room to work with. I just placed stops a couple of dollars above the neckline.
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Quoting speedster239
Glad to see we're in the same boat. I took a look at the charts this morning and as suspected she road the bearish trend much farther downward than where I took profit last night. It would have been a nice ride but I'm still confident I made the right decision to take profits rather than a loss in an unsettling situation.

Also,
Are you trading a demo account or are you seriously well funded because you'd need to post like 55,000 margin for that trade?
Live account at forex.com uk with 200:1...I have decent margin to work with.
Thar' she blows. Just broke pretty significant support at about 1088.24

EDIT: There's a weekly trendline sitting at about 1074. i may close some or all of my positions there.

EDIT2: Actually...I can't take staring at profit so I just closed all of my positions at 1086.05 and will resell higher if given the chance.
Yep, I saw that. I agree that long is definitely not a certainty, which is why I did not jump into the rebound right away, however I'm still not certain that the bears will win immediately coming off the head and shoulders. I feel she's going to settle down at 1080-1083 and reverse temporarily. Still, the overall trend will be down.
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