HOW TO TRADE GOLD
Step #1: Buy Gold in the trading months with above average return
The first step is to make sure that you’re buying the months that Gold price has the tendency to rally. According to the gold seasonal pattern the best months to buy gold and the best way to buy gold is in January, February, August, September, November and December.
The number one thing these months have in common is that the gold price return is above average during these trading months.
The seasonal price pattern for gold tends to repeat itself quite often because smart money tends to do the same thing over and over again.
Step #2: Wait until Gold retrace to the 0.618 Fibonacci Retracement of the previous market swing
It’s not enough to identify the seasonal pattern and to focus just on that. We believe there should be at least one more element you should include in your trading strategy
When you combine both the seasonal pattern and the Fibonacci retracement indicator, this alerts you that a potential Gold buying opportunity lies ahead
This is a robust trading system, but you have to be flexible with the rules and try to fit it in the overall price action as well.
Step #3: Buy at support or on the way up as we break above resistance
Remember, when dealing with this type of trading principle it’s all about flexibility.
For our gold buying strategy, we’re proposing a very simple technique. If the price of Gold at the time of your analysis is trading at support you can go ahead and buy it.
However, if the market starts rallying before we enter into January, wait until we break above previous resistance to buy gold.
Step #4: Place protective Stop Loss below last swing low
If gold is following its seasonal pattern than new highs should be seen not new lows.
If gold break to new low, this will invalidate our trade and we want to be out of this position.
In this regard, when we trade gold with this strategy, we place our protective stop loss below last swing low.
Step #5: Take Profits before the end of February and trail your SL below each swing low
If gold has followed its seasonal pattern in the first months, it’s wise to expect it to continue following the seasonal cycle moving forward. According to gold seasonal pattern March is one of the worst trading months for gold, so it’s best to liquidate your gold position and enjoy your profits.
You can also find sell signals using the exact opposite trading rules. The way it works for a SELL trade can be seen in the example below:
The first step is to make sure that you’re buying the months that Gold price has the tendency to rally. According to the gold seasonal pattern the best months to buy gold and the best way to buy gold is in January, February, August, September, November and December.
The number one thing these months have in common is that the gold price return is above average during these trading months.
The seasonal price pattern for gold tends to repeat itself quite often because smart money tends to do the same thing over and over again.
Step #2: Wait until Gold retrace to the 0.618 Fibonacci Retracement of the previous market swing
It’s not enough to identify the seasonal pattern and to focus just on that. We believe there should be at least one more element you should include in your trading strategy
When you combine both the seasonal pattern and the Fibonacci retracement indicator, this alerts you that a potential Gold buying opportunity lies ahead
This is a robust trading system, but you have to be flexible with the rules and try to fit it in the overall price action as well.
Step #3: Buy at support or on the way up as we break above resistance
Remember, when dealing with this type of trading principle it’s all about flexibility.
For our gold buying strategy, we’re proposing a very simple technique. If the price of Gold at the time of your analysis is trading at support you can go ahead and buy it.
However, if the market starts rallying before we enter into January, wait until we break above previous resistance to buy gold.
Step #4: Place protective Stop Loss below last swing low
If gold is following its seasonal pattern than new highs should be seen not new lows.
If gold break to new low, this will invalidate our trade and we want to be out of this position.
In this regard, when we trade gold with this strategy, we place our protective stop loss below last swing low.
Step #5: Take Profits before the end of February and trail your SL below each swing low
If gold has followed its seasonal pattern in the first months, it’s wise to expect it to continue following the seasonal cycle moving forward. According to gold seasonal pattern March is one of the worst trading months for gold, so it’s best to liquidate your gold position and enjoy your profits.
You can also find sell signals using the exact opposite trading rules. The way it works for a SELL trade can be seen in the example below:
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