You should not jump right into gold trading, without doing some research. The market moves at a rapid pace and without the proper education, you are going to get burned out in no time.
The Tortoise and the Hare
The hair moved fast and got burned out before he could finish the race. The tortoise moved at a glacier pace and run. The story may be trite, but it does prove a point. Investors need to think long-term and aspire to be the tortoise, not the hare.
1) You will find that gold has a huge daily range that will sometimes prove to be overwhelming. It is not that uncommon to find a daily range of 300-500 pips, 160 pips on a slow day. You need to remember. Learn to expect the unexpected because things will change.
2) The market is ripe with volatility. A piece of gold you are interested in will swing between 50-100 pips in just a few seconds. One order will go from winner to loser in a matter of seconds, as another order does the opposite. Do not make a habit of waiting. Sometimes you need to pounce on something before it closes. You will win and lose, so plan accordingly.
3) Gold has something called a “split personality”. Gold will go from swinging to running within a split second. You need to pay attention to the moves it makes because that is the only way to know.
4) The S/R feature will be a new best friend. Gold respects the system very well. Pay attention to the S/R because that is where a lot of your information will come.
5) You need to wait for a candle close because it is mandatory on everything, especially the entry. The price can and will change as you get down to the wire. Putting all your eggs in one basket because you “think” something will happen is not a good strategy. Investors get burned doing that. Learn from the other casualties, do not become one yourself.
6) Learn about reversal candlestick formations because they are accurate.
7) Gold moves well during most of the day. The only times gold does not bode well is during the last few hours in New York and the first few hours in Asia. Once Toky opens, then gold can be moved and traded. The biggest moves happen during the opening times of New York and London. These are just a point of reference to keep in mind.
8) Did you know that price action is king? Let us use Steven as an example. Steven sees his choice in gold moving strongly after a period of “quite price” action. Steven should consider that a good indication that things are moving in the right direction trade gbp.
9) You need to be accurate at identifying gold in the proper areas. Those who are not will get burned badly. Things like “revenge trading” and “shooting from the hip” are examples of things not to do. Have a plan and stick to it.
10) Gold trading is definitely not for beginners. Those who struggle will eat their lunch and then some. You need to be disciplined and know what you are doing. You need to know how the market works. You should know what percentage the market keeps versus what you will earn. The two are not mutually exclusive, contrary to popular belief. You will only get a percentage of what you invest. The market keeps the rest.