Volatility to trade gold

1. VOLATILITY TO TRADE GOLD

2. POINTS TO BE COVERED TODAY:
1
How To Use Volatility To
Trade Gold
2
How to Day Trade Gold
3
Best Time To Trade Gold

3. HOW TO USE VOLATILITY TO TRADE GOLD
 “Volatility” in trading means how much the price of something
fluctuates.
 You can use average price movement, which we call average
volatility or average true range, to determine better trade entry
points, because if volatility is relatively high today, it is likely to also
be relatively high tomorrow, suggesting a stronger movement in
your favor is more likely.
 Volatility is best measured using an indicator called Average True
Range (ATR) which is available in almost every trading platform or
charting software package.

4. HOW TO USE VOLATILITY TO TRADE GOLD-I
For example,
 Suppose that the price of Gold is closing today at a 6-month high price. We have already
shown that there has been an edge in trading such long-term breakouts in the Gold price.
 If you switch on the ATR indicator on your daily chart and set it to the last 15 days, it will show
you by how much the Gold price has moved per day on average over the last 15 days.
 If today’s price movement is significantly higher than the value shown by the ATR indicator,
that means that the price is breaking out to new highs on above-average volatility. This
means that tomorrow it is more likely to rise further than usual, as the volatility is above
average.
 We can demonstrate this by looking at some historical data of the price of spot Gold from
2001 to 2019. Let’s compare the days when the price closed at a 100-day high or low price,
see whether the price continued in the same direction over the next, and by how much,
broken down by how strong the volatility was as measured by the 15-day ATR indicator.

5. GOLD 100-DAY VOLATILITY BREAKOUT STRATEGY BACK TEST
• The historical data shows that during this period, more profitable trades were
triggered when the price of Gold moved in one day by more than the 15-day
average daily price movement.
• On average, where the day’s price movement was above its 15-day ATR on a
breakout, it closed by a further 81 cents in the direction of the breakout the
next day. Where the day’s price movement was below its 15-day ATR on a
breakout, it only made a further 51 cents the next day.

6. HOW TO DAY TRADE GOLD
 Gold is very suitable for day traplus commission for
trading Gold is higher than ders. One advantage in day
trading Gold is avoiding the cost of overnight swaps,
which can be relatively large at many Gold brokers.
 The main disadvantage is that the spread in the major
Forex currency pairs, but this is compensated for by the
higher average price movement in Gold.

7. TIPS TO GOLD DAY TRADERS
 If the price is HIGHER than it has been for the past 6 months, be STRONGLY
BULLISH.
 If the price is HIGHER than it was 6 months ago but BELOW some of the
prices reached since then, be WEAKLY BULLISH.
 If the price is LOWER than it has been for the past 6 months, be STRONGLY
BEARISH.
 If the price is LOWER than it was 6 months ago but ABOVE some of the
prices reached since then, be WEAKLY BEARISH.
 If the price has shown little direction over the past 6 months, trade
REVERSALS at obvious areas of support or resistance.
 Gold day traders should use shorter time frames to fine-tune entries in line
with the above points.

8. BEST TIME TO TRADE GOLD
 The price of Gold tends to move more at certain times of the
day.
 Day traders should try to day trade Gold during these more
volatile times to take advantage of the increased price
movement.
 The data show that the price of Gold tends to move the most
on average between Noon and 8pm London time, roughly
corresponding to the hours when markets are open in eastern
and central U.S.A.
 This suggests that the best time of day to trade Gold, whether
as Gold options, Gold futures, spot Gold, or XAU/USD is from
Noon to 8pm London time.
 This is probably true because the major Gold market opening
times are within this period.

9. TRADING GOLD TIPS
 It is worthwhile trading Gold as its price moves a lot and often trends strongly.
 Almost every Forex broker offers Gold trading.
 Trade with the 6-month trend. New 6-month breakouts are best.
 Enter on a price breakout or a pullback following the breakout.
 Fundamental analysis can be used to determine which technical analysis signals are more
likely to perform better.
 Take profit on winning trades by using some type of trailing stop.
 Beware of overnight swap fees if you hope to keep a trade open for more than a couple of
days.
 Always use a hard stop loss based upon the value of the ATR indicator. Tight stops such as
half of the daily ATR tend to give good results.
 If the U.S. Dollar Index is trending up, you may feel more confident in taking short trades in
Gold priced in U.S. Dollars; if trending down, you may feel more confident in long trades.

10. FAQS
How do you trade gold successfully?
 The easiest way to trade gold successfully is to buy breakouts to new 6-month high prices, while relying upon a
volatility-based trailing stop loss to take you out of the trade.
Is trading gold profitable?
 Trading gold can be profitable, especially long trades as the price of Gold in U.S. Dollars has tended to rise over
recent years. Gold has seen several periods of spectacular price gains which has given traders an opportunity to
from the precious metal.
Where can I trade in gold?
 Almost all Forex / CFD brokers, as well as traditional stockbrokers, offer their clients trading in gold or gold-backed
instruments such as ETFs or mining shares.
What time can I trade Gold?
 Gold trades 23 hours a day on weekdays, as the main CME Globex exchange upon which gold is traded is closed
between 4pm and 5pm U.S. central time. Most Forex / CFD brokers allow you to trade gold at the same time as
CME Globex exchange is open.

11. GOLD PRICE

12. GOLD CHART

13. VOLATILITY TO TRADE GOLD

14. THANKS FOR LISTENING
VOLATILITY TO TRADE
GOLD