Simple Gold Trading Strategy

 Even if you’re looking to simply invest in Gold, and buy and hold for the long run, you can take advantage of our simple gold trading strategy. Use it to time the market, no matter your trading style. Our trading strategy makes it simple for you to see the change in gold trends. You can easily spot those buying and selling opportunities. For the purpose of this article, we’re going to look at the buy side.

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.

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. here is another guide on how to make money trading.

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.

In our proposed gold trade example we can see that Gold has traded below the 0.618 Fibonacci retracement of the previous market swing. But this action happened during December and we can see that gold price started picking up right from the start of January 2018.

Next step will also outline our Gold buying strategy.

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.

As you can see the actual gold price followed its seasonality cycle. This means that our seasonal analysis was correct

The next important thing we need to establish for our Gold strategy is where to place our protective stop loss.

See below 

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.

If you had used this simple gold trading strategy, you would have anticipated the new Gold trend and made some big profits from it.

In two months you’ve made a healthy profit as gold price went from $1265 to $1366.

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: