Gold Trading Strategy with Stochastic Indicator


gold trading strategy stochastic indicator tutorial cover

We create a Gold Trading Strategy that uses stochastic as a basic instrument for the purchase and sale of futures in the short and long term.

 

The stochastic will show significant changes in the momentum of the price of gold.

Used in combination with the fundamental analysis and other technical instruments, the stochastic will add an extra dimension to your trading.

 

When you talk of the market of gold, data of supply and demand are readily available.

An investor eager to deepen can quickly find in internet data on annual production, annual consumption and the total of world stocks.

 

Look if the production or the consumption is increasing or decreasing compared to previous years.

The cost of production of an ounce of gold is increased or decreased?

 

The answer to this question may shed light on the condition of the bottom of the gold market.

You need to understand these dynamics to create a Gold Trading Strategy.

 

Gold Fundamental Analysis

It is necessary to use the knowledge of the fundamentals to determine the tendency of the basis of the price?

 

The knowledge of the fundamentals alone does not make money by buying and selling a commodity like gold.

This is true for short-term trading.

 

Stochastic Oscillator

The stochastic oscillator is a technical instrument to test a trend.

Measure if a market has the enthusiasm to continue a trend or if this trend is short of energy.

 

stochastic oscillator

 

The stochastic oscillator correlates the closing price of gold for a period to the range of its prices for another given period.

When the price of gold grows, it closes on the maximum values for the whole period under examination.

 

When the price of gold is weak, the price closes to the minimum for the whole period under examination.

There are two types of stochastic that traders use, fast and slow. In a market like gold, the Slow Stochastic is preferable since the Fast Stochastic gives too many false signals of purchase and sale.

 

Use the stochastic with a time-frame in combination with a range of price or a moving average set three times on this time-frame.

This Gold Trading Strategy works for any time-frame, monthly, weekly, daily or even for intraday trading.

 

The important thing to remember about stochastic for stochastic oscillators, a value greater than 80 reports that the price of gold is in overbought’s area.

A value of fewer than 20 reports that the price of gold is in the territory of oversold.

 

Be careful to consider the signals with your Gold Trading Strategy.

 

Stochastic and Moving Averages in Gold Trading Strategy

When in the stochastic intersect the moving averages, signals of trading induce to act to buy or sell?

When the moving averages intersect, in stochastic, on the rise, this is a buying signal.

 

If the value of the stochastic is under 20, is a signal that the commodity is in the oversold area and is an excellent buying signal.

Stochastic is only one part of the overall framework.

 

The gold price may remain overbought or oversold for long periods of time.

That is why it is so important to use the moving averages of the stochastic that intersect giving a signal of sale.

 

Use a process multi-step for trade gold. You decide the general trend of the direction of the price using the fundamental analysis.

Once you have decided on a trend, the opening of your trade should always reflect that tendency.

 

Conclusions

Wait patiently for the correct technical signal in the Gold Trading Strategy.

The stochastic is not the only technical instrument to use but is a powerful tool for a variety of reasons.

 

As a trend indicator, it shows a displacement of trading activities, which expects a reversal of the direction of the price.

The stochastic is used by so many technical operators that the signal itself can often create a prophecy that will become true.

 

For choosing the right moment to make a profit or cut a loss on a position in the gold, the stochastic is a powerful tool.

Both of you are new in trading and investment or whether you are experienced professionals, use all the tools at your disposal.

 

A combination of fundamental analysis and technique will give you a complete overview.

Keep up to date on the fundamentals of supply and demand.

 

Pay attention to purchases or sales of gold by the Central Bank.

Try to keep you informed on the increase or decrease in the demand for gold in the different parts of the world.

 

Some changes in the fundamentals can cause strong sudden movements in the price of gold.

When certain your directional trends used the stochastic oscillators to locate the best areas for buying and selling.

 

More from Finance Strategy System

ATR with Bollinger Bands

Bollinger Bands Essential Indicator

Graphic Technical Analysis

How to auto trade divergence

Parabolic Sar

Wikipedia

MACD Indicator – Moving Average Convergence Divergence – Tutorial

HOW TO USE THE MOVING AVERAGES TO IDENTIFY THE TREND

Pivot Points || Essential Tutorial 2020(Opens in a new browser tab)

How to read a Price Chart – Bar Chart – CandleStick – Kagi – Heikin Ashi

The TRIX || Triple Exponential Average Indicator || Tutorial

Market Correlation | Stock Market – Bond – Commodities

 

Recent Content