Trading gold on the Forex market: how to make a profit?

Gold is firmly at the top of the list of the most popular trading assets in the Forex market. Many traders add XAU/USD to their portfolio not only to diversify and expand it, but also as a defensive asset. And there are many reasons for this - today, with the information support of a reliable broker NPBFX, we will understand all the nuances of gold trading on the Forex market. Let's look at the history of gold trading

From a historical point of view, gold has always been considered a symbol of prosperity and wealth, while being the basis of exchange. There is the concept of a “gold standard” - a monetary system in which the standard of the monetary unit corresponds to a certain amount of gold. For a long time, the entire global financial community existed in accordance with these standards.

It is noteworthy that the collapse of this system can be called the birth of the Forex market. In 1971, American President Richard Nixon made the historic decision to abandon the gold standard. This led to a global reform of the foreign exchange market as a whole and the possibility of free changes in exchange rates.

Gold on Forex: trading on MT4

What are the disadvantages of gold trading?

Analytical portal for making the right trading decisions on gold

Gold trading strategies for MT4

How much can you earn from gold?

Can beginners trade gold?

NPBFX is a recommended broker for trading XAU/USD

Gold as a “shield” during periods of market collapse

However, even despite the refusal to back the currency with gold, this precious metal still remained one of the safest instruments and a kind of “safe haven” of financial markets, the most famous safe haven asset. Gold is considered the best way to protect your capital from inflation and currency depreciation. This can be noted throughout history.

Despite the emergence of competitors, gold retains its leadership as the best protector of funds in times of crisis. Thus, it is noted that allocating at least 5% of the total trading portfolio to the XAU/USD instrument can significantly reduce risks and increase overall profitability. The point is that gold cannot lose its liquidity or be exposed to credit risk, it is not bound by a large package of obligations and cannot fall to zero.

As an example, here are several situations where gold has helped people save money: most of the world during the Great Depression in the 1930s, Western countries in the 1970s, the USSR in 1990, the financial crises of 2008, and even the financial crisis caused by the coronavirus pandemic, which started at the end of 2021 and is still ongoing in 2021, as well as the trade war between the US and China.

Gold on Forex: trading on MT4

For broker NPBFX, gold confidently ranks first in the ranking of trading volumes among precious metals on Forex. Professionals note that XAU/USD has the ideal set of characteristics for profitable trading, combining liquidity, predictability and volatility. The most popular MetaTrader 4 platform and favorable NPBFX conditions make gold trading even more comfortable.

Advantages of trading gold with NPBFX broker:

Transactions are concluded with instant speed and automatically.
Margin trading with leverage up to 1:1000.
Low spreads.
Working according to the STP/NDD model guarantees withdrawal to the interbank market.
The transaction execution method is Instant Execution, this allows you to set the maximum deviation from the requested price.
No requotes or rejections.
There are no restrictions on trading methods and strategies; the use of advisors and robots is acceptable.
Gold is an easily predictable asset, which means that trading the precious metal is suitable for both beginners and professionals. NPBFX offers a variety of training options.

Content

General conditions for trading gold
Gold trading strategy based on news
Fundamental Gold Trading
Intraday gold trading: EMA+MACD+MFI strategy
Gold Trading Strategies DrakeDelayStochastic
Some features of gold trading
Instead of a conclusion

Today, this valuable metal, the most “emotional” and reliable financial instrument, is traded on Forex as a regular spot asset. In addition to direct gold trading, its active dynamics are used as a leading indicator for ordinary assets.

What are the disadvantages of gold trading?

As with other instruments, there are also a number of disadvantages to trading gold. However, all of them can be easily mitigated by choosing the right broker and trading conditions. Among the main disadvantages are the following:

• Sensitivity to world events. To trade gold correctly, it is important to be aware of almost all significant events in the world and devote a lot of time to it. It is especially worth paying attention to the news background from the United States, given that gold is traded in pairs with the USD.

• Energy dependence. The price of gold can be significantly affected by the cost of oil and gas. This fact is important to consider when trading this precious metal.

Forecasts for the future

From the point of view of technical analysis, it can be assumed that the correction within the global uptrend is coming to an end. In the near future, the pair will continue to grow.

The figure below shows that the price of gold has broken upward the horizontal resistance level, which has been forming for six years. If the price consolidates above it, this will mean the end of the correction and the continuation of the movement towards the next target - the highest high on the chart (the area between the price marks of $ 1,800 and $ 1,900 per ounce). This theory is also supported by three rising local minima.

Analytical portal for making the right trading decisions on gold

Broker NPBFX has developed a special Analytical Portal, which contains all the information necessary for profitable trading. On the portal, the trader is guaranteed regular analytics from gold professionals, indicators, trader tools, video reviews, and a variety of educational materials, including an electronic textbook.

In addition, the portal provides access to trading signals that are updated once a minute. Such signals can tell you what to do at a given time with each asset - sell, buy, or still need to wait. Signals are generated based on the ten most popular indicators, which makes them as accurate as possible. Trading signals, together with the economic calendar and detailed analytics, will make trading for “gold” traders even more profitable and profitable.

The analytical portal also contains a detailed description of more than sixty trading strategies that are suitable for both gold and other trading assets. Let's take a closer look at some of the “golden” strategies.

You can get free access to the Analytical Portal from NPBFX after registering your broker’s Personal Account.

Gold trading strategies for MT4

• News trading. As already indicated, news has a really strong impact on the movement of gold quotes. That is why news trading is the easiest and at the same time effective way to make money on precious metals on Forex. Any events that worsen the overall global economic background can significantly push the price of XAU/USD up.

• The correlation strategy is one of the simplest, since you do not need to have deep knowledge of the market and knowledge of various analyses, observation is enough. The essence of the strategy is to detect patterns in price movements for certain trading instruments. In order to find out which currency gold has what correlation, you can use a special tool in the NPBFX Analytical Portal - the correlation coefficient calculator.

• Goldmine strategy for XAU/USD. To use the strategy, you need a chart with a D1 time frame, on which the Bollinger Bands indicator with a period of 20 and Stochastic with the following parameters are installed: K Period 5, D Period 3, Slowing 3. Take profit is set at the level of the central Bollinger line, at which it is located at opening a position.

For a sell transaction, the following conditions must be met: the price reaches the upper Bollinger line, a bearish candlestick is clearly visible on the chart. At the same time, the Stochastic lines are directed downward and are located in the overbought zone.
For a buy transaction, the opposite is true: the price is in the area of the lower line, and a “bullish” candle is clearly visible on the chart, while the Stochastic is in the oversold zone, its lines are directed upward.

In general, there are no restrictions on the choice of assistant indicators for trading gold. The only important point is that the indicators should not lag. Therefore, gold traders most often use modified versions of Stochastic and MACD, and Fibonacci levels are also often used to correctly set stop loss and take profit.

Global gold trend.

The price of XAUUSD is influenced by a number of factors, in particular: seasonality, time of day, release of certain news, etc. If we talk about the global trend, then looking at a chart with a period of 1 week on a time period of 30 years, you can see that it shows growth with frequent time corrections. After 2021, forecasts of a relatively strong price increase as a result of the Fed's abandonment of its zero-rate policy have become more frequent. But for now these are just forecasts:

Rice. 5. The upward trend in the price of gold over a period of 30 years.

When analyzing the time period since 2011, you can pay attention to the change in the range of fluctuations. Further movement can be divided into 2 periods: a decline in prices until 2014, and the subsequent flat. With this behavior of the exchange rate, it is difficult to talk about a certain direction in the price of gold, which casts doubt on its role as a “safe haven”. Therefore, traders, against the backdrop of the growth of stock markets in developed countries, have reoriented themselves towards them in the last decade. Even the common man during times of crisis preferred digital currency to gold.

But on the other hand, the flat, which has been observed for the last 3-4 years, has quite wide boundaries, and this makes it possible to carry out trading operations, if not according to unidirectional strategies, then according to speculative short- and medium-term ones. For example, on the daily chart below, gold shows a fairly long, clear downward trend over several months, which can be safely used to enter into profitable short trades:

Rice. 6. An example of a fall in the price of gold on the chart in the medium term.

Seasonal fluctuations of XAUUSD.

Although it is not possible to talk about a global trend for the XAUUSD pair, the quotes, as mentioned above, are influenced by seasonality. This means that based on this factor, you can analyze, predict the price of gold and trade it. Let's analyze the graph below, which is divided according to the summarized curves of 15-10-5 year fluctuations. One can note a clear upward movement during the Christmas holidays. We are talking about the end of December, January and even February:

Rice. 7. The influence of seasonality on gold price fluctuations.

The growth in the rate at the beginning of the year can be explained by the reflection of funds that hold some of their assets in gold. Using gold as a protective instrument is the right decision in order to diversify risks when managing large capital. After winter growth, a spring correction is observed. And this is clearly visible throughout all time periods.

Then growth is observed in the summer (although the five-year curve does not reflect this), when trading activity in other markets decreases, and part of the capital is temporarily accumulated in a less risky instrument - gold. 2021 was clear proof of this. All this means that the seasonality factor can be used as a filter when concluding transactions in the medium term.

Characteristics and specifications of XAUUSD.

In Forex broker terminals, gold is indicated in two versions: XAUUSD or GOLD. The designation XAUUSD is more correct, as it complies with the ISO 4217 standard, according to which the instrument of the pair must have a three-letter code. In the periodic table, gold is represented by the letters Au (Aurum), and by adding the letter X in front it becomes XAU. The gold rate is represented by a quote with two digits after the decimal point and four before the decimal point. It reflects the current value of a troy ounce in dollars.

When calculating the price change of XAUUSD, the value of the numbers after the decimal point should be taken as a two-digit number of points. This means that if the price changes from 1232.00 to 1232.50, the increase will be 50 points. And if it changes to 1233.00, the increase is 100 points.

To correctly calculate the cost of one point of gold, you can use the online calculator at AvtoForex.ru, and also accurately calculate the possible trading result of the transaction.

Before you start working with gold, pay attention to the trading hours for this instrument with your broker. Some companies close trading using XAUUSD an hour before midnight. It will be unpleasant to find out about this at the end of the day one Friday when you decide to close the trade, not wanting to carry it over the weekend, only to find that the market is no longer working. Read the contract specification in advance to get all the necessary information: trading time, swap size, etc.

Trading activity periods for XAUUSD.

As we wrote above, due to the absence of a global trend, XAUUSD can be traded in the medium or short term. We recommend determining the most suitable periods for trading using the Forex volatility indicator, which can be used on the MyFxBook service (time is indicated there in GMT). According to the indicator, the highest daily volatility is observed in the morning hours of the Asian trading session, during the opening of the London Stock Exchange, which actively trades metals, and at the beginning of the American session. The most active trading period corresponds to the time interval between 13-00 and 16-00 GMT:

Rice. 8. Gold volatility indicator hourly during the day.

There you can also analyze the volatility of gold by day of the week to keep in mind which days gold is most actively traded.

Golden correlations.

On the MyFxBook website you can analyze the relationship between price trends of gold and other instruments. You will find a special indicator in the Market - Correlation section. In the table with trading instruments, select gold, after which a page will open where, by applying filters by time periods from 5 minutes to 1 month, you can determine the correlation of XAUUSD with other pairs. Moreover, the samples are presented for analysis for both absolute, positive and negative correlation.

If you set a time period of 1 month, you can pay attention to the high degree of negative correlation with the Chinese currency, which is associated with the country’s leading position in the extraction of this metal, but at the same time, in the quotation with the dollar, the yuan is second in pair:

Rice. 9. Level of negative correlation between gold and other instruments.

For clarity, let’s open the charts of these instruments and compare them. We see that they move almost mirror image:

Rice. 10. Negative correlation between USDJPY and XAUUSD on the chart.

The correlation is 75%, which is precisely the probability of a repetition of the gold price movement. Violations may be associated with fundamental reasons and not only.

What should a trader do with this information? It can be used to open transactions on two different instruments, for example, in the case of a negative correlation, a gold transaction can be opened in the opposite direction to a yuan transaction, which allows you to diversify trading risks.

The influence of fundamental indicators on the XAUUSD rate.

The rate of gold is strongly influenced by the interest rates of the US Federal Reserve and the ECB, their GDP and inflation indicators. Due to the presence of the US dollar in a pair with gold, the most important news for the USD will have an impact on the pair as a whole.

News related to China and indirectly to Asia should also be taken into account, as evidenced by the high average volatility at night. You can assess the degree of influence of this or that news depending on the time of its release, previous and predicted values on the Avtoforex.ru website in a special economic calendar.

XAUUSD trading strategies.

The liquidity of gold trading on Forex is relatively low, so regardless of the time frame, within a particular range there will be a rapid change in quotes. This feature of the XAUUSD exchange rate can be taken as the basis for creating a trading strategy.

Due to the high margin requirements of the spot market, it is available only to professional speculators, so it accounts for the main volumes. But for the XAUUSD pair, the market depth is weak, and any large transaction can collect pending orders from several levels simultaneously. A sharp increase in price and the subsequent market response can be used as a signal for a counter-trend strategy:

Rice. 11. Fall in gold prices after a sharp rise.

If the candles leave long tails in the direction of the current trend after closing, then this can be considered as a signal to trade in the opposite direction. A false breakout strengthens the signal, while the tail of the candle should break through the existing flat range. An example is shown in graph H1:

Rice. 12. Possibility of concluding a transaction with gold.

Depending on the length of the tail of the signal candle, a stop loss is set, and the take profit size is equal to the maximum range of the local trend, which, as a rule, consists of two or three candles.

Forex market professionals who can easily determine the boundaries of a flat and know how to place pending orders behind them can use range breakout or breakout strategies for trading. The impulsive nature of price movements makes it possible to make good money using such tactics.

For intraday trading, the most successful period is from 15-00 to 20-00 Moscow time. Trading using flat strategies at night will not work. As for trend trading, it pays off at least on daily candles:

Rice. 13. An example of trend movement on the daily gold chart.

Before turning to classic trend strategies, it is necessary to take into account the peculiarity of the high fluctuation range, and the fact that you will have to use a large stop loss so that the long tails of the candles do not knock the deal out of the market ahead of time.

You can reduce the frequency of stop loss triggering by using the ATR indicator, which helps in determining volatility.

Strategy American gold explosion.

Let's look at a specific strategy for trading gold, which, despite its simplicity, is very effective.

Open chart H1. We will use the time period until 15-00 Moscow time, which is not yet conducive to trading, as a range filter, determining the flat price boundaries formed before this. We will trade according to the classic breakout principle:

- after 14-00 we place two orders in different directions - Sell Stop and Buy Stop below and above the flat boundaries, respectively;
— the take profit level will be equal to the size of the flat range, which is determined within half an hour;
— stop loss is set beyond the opposite border of the price corridor;
— the transaction will be closed either when the take profit level is reached, or after 20-00, regardless of the presence of profit or loss.

Rice.
14. Conditions for concluding a sale transaction. You can adapt the American Gold Explosion strategy to suit your trading style by changing or adding certain rules.

Conclusion.

In terms of movement style, gold cannot be compared with currency pairs. It is characterized by low liquidity and specific activity during the day. But it is precisely these features that allow you to create interesting strategies and make good profits by trading this instrument.

The American Gold Explosion strategy discussed above is an analogue of the London Explosion; it is interesting in that before opening a transaction it does not require a clear forecast of the further direction of price movement. That is, the lack of a clear intraday direction in this case is an opportunity to make money without conducting complex fundamental and technical analysis. Also, when trading with XAUUSD, you can turn to the pairs trading method using correlations, for example, with the yuan, or use divergence signals to further filter the main signals for opening gold trades.

How much can you earn from gold?

As practice shows, by trading using signals, it was possible to get an increase of more than 4,000 points in just the first months of 2021 with gold in the trading pool of assets. Numerous geopolitical events and the onset of the coronavirus crisis have only increased the number of opportunities for making money on gold as a protective asset.

The chart below shows the historical highs and lows of gold price movements. As you can see in the picture, since 1971, gold has never fallen to its historical minimum, but only set new price records.

What's next

You have become acquainted with the “Gold Read Slope” strategy, which will not bring results to many traders. It’s all about thinking and unwillingness to lose for the sake of future results - for details, see the article “How to consistently start making money on the Forex exchange from scratch.” It reveals the main principle of making money on Forex. It is also important that when working with a real deposit, the trader is not subject to the habits of poor people. To find out what these habits are and how to correct them, watch the next video. This is your homework for today.

PS If you can’t make money on gold, try returning to currency pairs and choosing a Forex strategy from our catalog.

Can beginners trade gold?

Of course, but in the case of novice traders it is very important to find the right broker for trading gold - otherwise the lack of certain knowledge and experience can play a cruel joke on the trader.

In gold trading, as in trading any other asset, it is important to constantly improve. Broker NPBFX not only provides access to training materials in its Analytical Portal, but also regularly conducts online webinars dedicated to studying a particular topic in depth. The company also hosts webinars on gold trading. By constantly improving and having access to trading signals, even a beginner can cope with XAU/USD.

In addition, gold as a trading asset at NPBFX is available on all trading accounts offered by the broker. In addition to gold, the company offers more than 100 trading instruments (currency pairs, stocks, indices, crypto assets). And you can start trading with just $10 on deposit, which, provided you have a leverage of 1:1000, is a good chance for a beginner to try his hand at the real market right away without fear of losing a large amount. Detailed conditions are presented in the screenshot:

How and where to buy gold

You can buy gold in the form of gold bars or gold coins from banks that are licensed to handle precious metals. There are about 200 of them in Russia.

It doesn’t matter which one to buy gold from. Before purchasing, you first need to decide on the weight of gold. Its price directly depends on this. Bars and coins can be from 1 to 1000 grams. Their prices are indicated on the official websites of banks. When you decide to go to the bank to buy bullion or coins, be sure to take your passport with you. After making a purchase, the bank must issue you a certificate with a number on a sticker and a receipt. It is advisable not to remove the bar or coins from the packaging, as they are easily damaged. If they have even the slightest damage, in the future the selling price of gold will be less than the standard price. You can also sell gold to a bank or take it to a pawnshop.

NPBFX is a recommended broker for trading XAU/USD

NPBFX rightfully deserves the prestigious title of trustworthy “gatekeepers” in the brokerage industry. The company has a successful reputation and has solid banking experience: from 1996 to 2021. work with clients was carried out on behalf of Nefteprombank. In 2021, rebranding took place and services began to be provided under an independent financial brand - NPBFX.

Over the quarter century of its development, the broker has repeatedly proven 100% fulfillment of obligations to its traders, investors and partners. A lot of positive reviews about the company, the brokerage model of work without conflicts of interest puts NPBFX in the category of recommended brokers. As mentioned above, NPBFX will provide many beneficial advantages in gold trading - low spreads, no commissions for transactions and instant order processing speed, a wide range of deposit and withdrawal methods. It is important to note that NPBFX is included in the list of members of the International Financial Commission of the highest category A, which means that each client of the company is guaranteed insurance in the amount of 20,000 euros in case of disputes.