How to Trade Gold in Forex

The desire to own gold is not new. All around the world you will find people who dream of working with gold. Let’s face it. Unlike soybeans or wheat, gold is romantic. And owning gold is more than just a little bit impressive. Gold has a solid track record and if you’re not careful, you could even believe that investment in gold is fail-safe. But gold is finicky. If you’re thinking of trading in gold in forex, spend a little time understanding how it works.

Choose Your Trading Hours

Gold has few boundaries, and those include the hours that it moves well. Across the board, throughout the world, gold can stay active all day long. So whether you’re in Tokyo or Asia, hop in when the time is good for you. Compared to New York, the rest of the moves can be a little slower, but they’re still moving. The only hours to avoid are the last two hours or so of the New York trading session and the first two hours of the session when Asia opens.

Ups and Downs of Gold Trading

Before making the decision to trade in gold, you should understand that the gold market is highly volatile. One day you could be sitting on a golden egg and shortly thereafter, you might wonder what happened to it. Where did it go and why? However you trade, be prepared for the ups and downs in the gold market. Even from early morning until the evening gold can see wide ranges. Within minutes it can swing up or down by as much as 100 pips. Remember that waiting just a few minutes too long to make a trade can result in major losses in your financial folder. So before you make that first trade, have a plan in mind. Be ready to move faster than the price of gold!

Watching Candlestick Formations

When trading gold on forex, you must wait for candle close before jumping in or out. Be especially accurate when entering a trade. If you watch the final minutes of a candle, whether it’s a 30-minute candle, an hourly candle or a four-hour candle, gold can take a quick turn and reverse direction. Don’t speculate as to what you expect gold will do through a certain point of time, because you could be very unpleasantly surprised.

Starting With a Plan

However and whenever you are ready to trade gold, do your due diligence first. Develop a healthy respect for the fact that gold is volatile and can swing wildly in either direction. Pay close attention to what’s going on in the world, because it can quickly affect the gold prices. It can be tied to a fluctuating currency or used in electronics because of its anti-corrosive and conductivity properties. Or it can be used in making jewelry or held for safe-keeping by royalty and dynasties. Unlike commodities, it’s hard to predict what will set it off, so prepare your plan and be ready to act quickly.