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How to Day Trade Gold

Gold is one of the riskiest assets when it comes to trading contracts, since its volatility tends to knock down many trades and generate losses. However, this volatility can be used to maintain a high profit rate, as long as certain parameters are respected and the strategies are executed correctly. We will talk a little about how to day trade gold and make solid profits while investing in one of the most active assets in the market.

How to day trade gold like a pro?

Consider recent events to see upcoming trends

Gold is considered a safe haven asset because it is not subject to the direct control of governments or financial entities, which is why many people decide to invest in gold during times of crisis. If you are analyzing the market to trade gold during an economic crisis or in the midst of negative news regarding the productive apparatus, it is likely that many people decide to invest in gold to shelter their capital and prevent any devaluation.

This will likely start an uptrend for gold in which we can position trades at the lowest points of each pullback. Thus, we would be protecting our positions and taking advantage of many pips in each trade.

Wait for breakouts

One of the most effective strategies is to wait for breakouts when the price reaches support / resistance levels. Despite the effectiveness of this strategy, it should be noted that the trader must wait for the necessary confirmations and enter only after the pullback.

Although it is possible that the price will experience some push and go towards the next level of support / resistance without pullbacks, we cannot always depend on that possibility, so it is recommended to wait for the price to go back a bit and then open a position after a brief build up.

Pay attention for big institutional investments

Many companies tend to decide to invest most of their assets in gold to ensure the stability of their funds and obtain a long-term appreciation (since gold is a finite metal and over time it will be more difficult to acquire). These companies and central banks invest up to tens of millions of dollars/Euros (or more), which causes the price of gold to skyrocket and opens up new opportunities for natural investors and traders. Although these movements do not manipulate the price of gold for long, they can certainly be harnessed to obtain excellent profit percentages.

Analyze daily and monthly charts

For day trading gold you will have to study the market in much larger time frames so you can get a better notion of where the price will go throughout the upcoming days. Day trading gold signals will require very small leverage and will require you to hold your positions a little longer to avoid losing opportunities due to high volatility. 

Regardless of the strategy you use, if you want to know how to day trade gold and be successful doing it you have to consider protecting your positions once they are already in profit. The best way to maintain a return on assets as volatile as gold is to cut your losses and close them at a small profit margin, unless the price goes against your trade from the start and knocks down your stop loss before you can put it above your entry point.

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