How to Day Trade Gold?

If you were searching for an answer on how to day trade gold, we have it for you. Gold is one of the most used assets when it comes to reducing the exposure of our portfolio to volatile assets.

If you were searching for an answer on how to day trade gold, we have it for you. Gold is one of the most used assets when it comes to reducing the exposure of our portfolio to volatile assets. At the same time, it is used by traders to make profits with its price fluctuations. 

However, gold tends to be less volatile than traditional assets such as stocks and currencies. This is why we should take that into consideration if you want to know how to day trade gold. In this guide, we will share with you some strategies on how to do it and which things you should pay close attention to. 

Disclaimer: this post should not be considered investment advice. This is only for educational purposes only. Never invest more than what you are able to lose and always ask for information to your professional financial advisors. We are not financial advisors.

How to Day Trade Gold?

Let’s start with the basics. If you want to know how to day trade gold, you will need to have clear strategies. The strategy is perhaps the most important part of creating a day-trading plan. You need to ask yourself these questions:

  • How much am I willing to lose?
  • How much would I like to win?
  • How long do I want to have a trade open? 

These are just some of the questions that will be helping you to understand how to day trade gold. But let’s go to analyse them one after one. 

How much am I willing to lose?

This is going to be definitely important to understand which is going to be your stop-loss level. If you are trading with leverage or without leverage, you should have an exit point. This will help you maximize earnings and reduce losses to the minimum. 

The tighter your stop loss, the easier it will be for you to leave a position. Nevertheless, take into consideration that gold volatility is lower than in traditional assets. This is why your day-trading strategy could become a swing-trading strategy at any moment. 

Understanding how much you are willing to lose will allow you to have a clear strategy also in terms of profits. Remember, gold is less volatile than other assets, so you may be able to use tighter stop-loss orders compared to other traditional assets or stocks. 

How much would I like to win?

This is another important thing you should understand if you want to know how to day trade gold. You must set a winning target and follow it no matter what. If you opened a position and it has reached the target of, let’s say, 1% profit, then you need to close it. 

Even if gold ends up moving 2%. Close the trade and keep the 1% profit you were able to learn. Considering gold is a less volatile asset, you may not even need to use a trailing stop loss. This may be useful in the cryptocurrency market where prices can move up and down in a very short period of time. 

Stick to your winning strategy and do not let your emotions change your decisions. The best thing you can do is to set take profits levels, place the orders and let the charts do their job. This would reduce your stress and reduce your intervention driven by emotions. 

How long do I want to have a trade open?

You should know for how long you want to have a trade open if you want to know how to day trade gold. This is definitely important. As we have mentioned many times in this post, gold is less volatile than other assets. This is why its price may not fluctuate as much as you’d expect to close a trade. 

If that happens, what would you do? Will you close your position at a loss because the day ended? You need to certainly be pragmatic and be able to have a secondary plan to continue with a swing trade. Zoom out a little bit and understand the markets analysing the whole trend rather than just a few short-term candles. 

Moreover, you should also stick to your plan. Wait until you reach your 1% or 2% profit (or more) before closing a trade. Adjust your stop loss if necessary, use a trailing stop loss if you consider this could help you. Here is where you will need your analytical skills if you want to know how to day trade gold. 

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