Gold trading is one of the most difficult tasks in the world. You might have extensive experience in currency pair trading but when it comes to commodity market everything is gold. Since the price of gold is measured in U.S dollar a slight variation in the U.S dollar index greatly impact the gold market. However, the professional traders are always making a huge profit by trading the gold with a high level of precaution. On the contrary, the novice traders lose a significant portion of their investment in gold trading. Some people often avoid the commodity market to save their investment. But as a full-time trader, you have to learn gold trading with a high level of precision. So how do trade the gold market and make a consistent profit? After reading this article you will have a clear idea about the gold market. There are few steps that you need to follow to trade the gold. Let’s learn more about gold trading.
Impact of fundamental factors
As we said earlier in this article the price of gold is very sensitive to the change in U.S dollar index. Fundamental factors have great influence in the gold market and can even change the long-term market trend. You have to learn fundamental analysis with an extreme level of precision or else it will be really hard for you to deal with your loss. At times you might not understand how the fundamental factors are affecting the price movement but there is nothing to worry. You need to know the basics first. Instead of trading the market with your real money you need to use the demo account. Demo trading account is often considered as the best platform to learn financial instrument trading. Study the behavior of the price movement prior to the high impact news release. It will give you a general idea of the market volatility.
Trade the key swing points
All the professional traders in the CFD trading industry use the key swings in the market to find their potential take profit and stop loss level. Being a new trader you might not understand how to find the key swings in the market. But things are really easy. You have to know support and resistance level first. The major support and resistance level are often considered as the key swing point of the market. But never trade the key swings without any confirmation signal. No support or resistance will hold the price of a certain asset for an indefinite period of time. You have to use other trading parameters such as price action confirmation signal to trade the gold market. But before you use the price action trading strategy make sure you have complete knowledge of the Japanese candlestick pattern.
Use the risk management factors
Risk management is one of the most important elements in currency trading. It will always help you to protect your trading capital. You might have very little knowledge about gold trading but if you trade with high-risk reward ratio, you will always make money. Learn to embrace the losing orders since it is one of the easiest ways to create strong confidence. A few losing trades don’t mean your system is not working. You have to consider the long-term scenario before you take any major decision in the market. Understanding the lot size and placing quality trades is an art. At the early part of your trading career doing all these things perfectly will be extremely hard for you. But if you focus on the long-term market trend everything will become extremely easy for you. So learn trade management so that you don’t have to embrace big losing orders. Always lock your emotions while doing the market analysis. Create a simple but effective trading system to make a consistent profit. Follow an organized routine to protect your trading capital from emotions trades.