Everyone is busy with a currency trading strategy. The traders are dealing with major and minor pairs to find the best possible trades. Even after doing all the hard work, the majority of the retail traders are losing money. One of the key reasons for which they are losing money is the lack of concentration. They are dealing with too many assets that require extensive skills. And without having strong knowledge of technical, fundamental and sentiment analysis, it’s nearly impossible to deal with multiple assets. To make life easier, many smart investors prefer to trade gold only. In fact, you don’t have to deal with too much fundamental news to trade the gold.
The price of gold is measured in the U.S dollar. So, if you can analyze the U.S economy and news of the leading gold producer in the world, you are done with fundamental analysis. And when it comes to technical analysis, you can rely on the EAs and bots. In fact, many professional gold traders often rely on EAs to automate the complete gold trading process.
Today, we are going to discuss how the fx EAs can help us to trade gold like the professionals. After reading this article, you can expect to earn a decent amount of money by developing a gold trading strategy by using some smart EAs.
Pivot point analysis
First of all, you need to use an EA that can analyze the pivot points. Pivot points give you critical information about the support and resistance level. But make sure the EA analyzes the pivot point based on the higher time frame. If you try to make a profit in the gold market by using a short time frame trading strategy, you will increase the risk factors to a great extent. You can also include a function that can allow you to find the pivot points in the different time frames.
With the help of different time frame pivot points, you can trade the market when the volatility is very low. But if the market volatility is high, make sure you chose the pivot points in the higher time frame so that you don’t have to deal with the unnecessary noise of the gold price movement.
Analyzing the U.S dollar index
We have already said, gold is valued in terms of the dollar. So, if the green bucks gain strength, you are most likely to see a sharp drop in the price of gold. On the contrary, when the green bucks lose their glory, you are going to see a strong rally in the gold price. Most smart traders use the U.S dollar index EA which tells the traders about the strength of the bucks.
If the EA suggests a strong bullish rally in the U.S dollar index, you need to look for the short trade setups at the critical resistance level. On the contrary, when the U.S dollar index is in a downtrend, you need to look for buying opportunity.
Automatic adjustment of the stops
Gold is mostly traded by the trend traders. The professional trend traders always use the trailing stops so that they can maximize the profit without risking more money. With the help of advanced EAs, you can automate your stop loss placement. You can either define the stops based on some fixed point or use the concept of support and resistance level. Let’s say, you have executed long orders.
So, if the price manages to break above the critical resistance level, the EA will automatically move the stops below the new support (the broken resistance zone) to reduce the risk.
Creating price alert
By now you know how easily you can trade the gold just by analyzing the pivot point and U.S dollar index. Since the price of gold prefers to favor the trend, you might have to wait for a long time to find the perfect buying spot. But you can easily solve this problem by using the price alert EAs. If the price of gold hits a specific level, you will get instant notification in emails or on your smartphone. So, the chances of missing a good trade setup are nearly absent when you start using the price alert EAs.
Managing the risk factors
Trading gold is one of the easiest ways to earn money at trading. But still, you should always maintain a low-risk profile. Never trade the market with high risk to earn money. If necessary use a lot size calculator that can analyze your equity and market condition to determine the maximum lot size for the trade. You might be a very skilled trader but never expect to win all the trades. Always be prepared to deal with the losing orders since it will keep your fund safe. Last but not the least, use the EAs to trade the real market after testing its performance in a demo account.