Gold is firmly at the top of the list of the most popular trading assets in the Forex market. Many traders add XAU/USD to their portfolio not only to diversify and expand it, but also as a defensive asset. And there are many reasons for this – today, with the information support of a reliable broker NPBFX, we will understand all the nuances of gold trading on the Forex market.
Let’s look at the history of gold trading
From a historical point of view, gold has always been considered a symbol of prosperity and wealth, while being the basis of exchange. There is the concept of a “gold standard” – a monetary system in which the standard of the monetary unit corresponds to a certain amount of gold. For a long time, the entire global financial community existed in accordance with these standards.
It is noteworthy that the collapse of this system can be called the birth of the Forex market. In 1971, American President Richard Nixon made the historic decision to abandon the gold standard. This led to a global reform of the foreign exchange market as a whole and the possibility of free changes in exchange rates.
Gold as a “shield” during periods of market collapse
However, even despite the refusal to back the currency with gold, this precious metal still remained one of the safest instruments and a kind of “safe haven” of financial markets, the most famous safe haven asset. Gold is considered the best way to protect your capital from inflation and currency depreciation. This can be noted throughout history.
Despite the emergence of competitors, gold retains its leadership as the best protector of funds in times of crisis. Thus, it is noted that allocating at least 5% of the total trading portfolio to the XAU/USD instrument can significantly reduce risks and increase overall profitability. The point is that gold cannot lose its liquidity or be exposed to credit risk, it is not bound by a large package of obligations and cannot fall to zero.
As an example, here are several situations where gold has helped people save money: most of the world during the Great Depression in the 1930s, Western countries in the 1970s, the USSR in 1990, the financial crises of 2008, and even the financial crisis caused by the coronavirus pandemic, which started at the end of 2019 and is still ongoing in 2021, as well as the trade war between the United States and China.
Gold on Forex: trading on MT4
For broker NPBFX, gold confidently ranks first in the ranking of trading volumes among precious metals on Forex. Professionals note that XAU/USD has the ideal set of characteristics for profitable trading, combining liquidity, predictability and volatility. The most popular MetaTrader 4 platform and favorable NPBFX conditions make gold trading even more comfortable.
Advantages of trading gold with NPBFX broker:
- Transactions are concluded with instant speed and automatically.
- Margin trading with leverage up to 1:1000.
- Low spreads.
- Working according to the STP/NDD model guarantees withdrawal to the interbank market.
- The transaction execution method is Instant Execution, this allows you to set the maximum deviation from the requested price.
- No requotes or rejections.
- There are no restrictions on trading methods and strategies; the use of advisors and robots is acceptable.
- Gold is an easily predictable asset, which means that trading the precious metal is suitable for both beginners and professionals. NPBFX offers a variety of training options.
What are the disadvantages of gold trading?
As with other instruments, there are also a number of disadvantages to trading gold. However, all of them can be easily mitigated by choosing the right broker and trading conditions. Among the main disadvantages are the following:
• Sensitivity to world events. To trade gold correctly, it is important to be aware of almost all significant events in the world and devote a lot of time to it. It is especially worth paying attention to the news background from the United States, given that gold is traded in pairs with the USD.
• Energy dependence. The price of gold can be significantly affected by the cost of oil and gas. This fact is important to consider when trading this precious metal.
Analytical portal for making the right trading decisions on gold
Broker NPBFX has developed a special Analytical Portal, which contains all the information necessary for profitable trading. On the portal, the trader is guaranteed regular analytics from gold professionals, indicators, trader tools, video reviews, and a variety of educational materials, including an electronic textbook.
In addition, the portal provides access to trading signals that are updated once a minute. Such signals can tell you what to do at a given time with each asset – sell, buy, or still need to wait. Signals are generated based on the ten most popular indicators, which makes them as accurate as possible. Trading signals, together with the economic calendar and detailed analytics, will make trading for “gold” traders even more profitable and profitable.
The analytical portal also contains a detailed description of more than sixty trading strategies that are suitable for both gold and other trading assets. Let’s take a closer look at some of the “golden” strategies.
You can get free access to the Analytical Portal from NPBFX after registering your broker’s Personal Account.
Gold trading strategies for MT4
• News trading. As already indicated, news has a really strong impact on the movement of gold quotes. That is why news trading is the easiest and at the same time effective way to make money on precious metals on Forex. Any events that worsen the overall global economic background can significantly push the price of XAU/USD up.
• The correlation strategy is one of the simplest, since you do not need to have deep knowledge of the market and knowledge of various analyses, observation is enough. The essence of the strategy is to detect patterns in price movements for certain trading instruments. In order to find out which currency gold has what correlation, you can use a special tool in the NPBFX Analytical Portal – the correlation coefficient calculator.
• Goldmine strategy for XAU/USD. To use the strategy, you need a chart with a D1 time frame, on which the Bollinger Bands indicator with a period of 20 and Stochastic with the following parameters are installed: K Period 5, D Period 3, Slowing 3. Take profit is set at the level of the central Bollinger line, at which it is located at opening a position.
- For a sell transaction, the following conditions must be met: the price reaches the upper Bollinger line, a bearish candlestick is clearly visible on the chart. At the same time, the Stochastic lines are directed downward and are located in the overbought zone.
- For a buy transaction, the opposite is true: the price is in the area of the lower line, and a “bullish” candle is clearly visible on the chart, while the Stochastic is in the oversold zone, its lines are directed upward.
In general, there are no restrictions on the choice of assistant indicators for trading gold. The only important point is that the indicators should not lag. Therefore, gold traders most often use modified versions of Stochastic and MACD, and Fibonacci levels are also often used to correctly set stop loss and take profit.
How much can you earn from gold?
As practice shows, by trading using signals, it was possible to get an increase of more than 4,000 points in just the first months of 2020 with gold in the trading asset pool. Numerous geopolitical events and the onset of the coronavirus crisis have only increased the number of opportunities for making money on gold as a protective asset.
The chart below shows the historical highs and lows of gold price movements. As you can see in the picture, since 1971, gold has never fallen to its historical minimum, but only set new price records.
Can beginners trade gold?
Of course, but in the case of novice traders it is very important to find the right broker for trading gold – otherwise the lack of certain knowledge and experience can play a cruel joke on the trader.
In gold trading, as in trading any other asset, it is important to constantly improve. Broker NPBFX not only provides access to training materials in its Analytical Portal, but also regularly conducts online webinars dedicated to studying a particular topic in depth. The company also hosts webinars on gold trading. By constantly improving and having access to trading signals, even a beginner can cope with XAU/USD.
In addition, gold as a trading asset at NPBFX is available on all trading accounts offered by the broker. In addition to gold, the company offers more than 100 trading instruments (currency pairs, stocks, indices, crypto assets). And you can start trading with just $10 on deposit, which, provided you have a leverage of 1:1000, is a good chance for a beginner to try his hand at the real market right away without fear of losing a large amount. Detailed conditions are presented in the screenshot:
NPBFX is a recommended broker for trading XAU/USD
NPBFX rightfully deserves the prestigious title of trustworthy “gatekeepers” in the brokerage industry. The company has a successful reputation and has solid banking experience: from 1996 to 2016. work with clients was carried out on behalf of Nefteprombank. In 2016, it was rebranded and services began to be provided under an independent financial brand – NPBFX.
Over the quarter century of its development, the broker has repeatedly proven 100% fulfillment of obligations to its traders, investors and partners. A lot of positive reviews about the company, the brokerage model of work without conflicts of interest puts NPBFX in the category of recommended brokers. As mentioned above, NPBFX will provide many beneficial advantages in gold trading – low spreads, no commissions for transactions and instant order processing speed, a wide range of deposit and withdrawal methods. It is important to note that NPBFX is included in the list of members of the International Financial Commission of the highest category A, which means that each client of the company is guaranteed insurance in the amount of 20,000 euros in case of disputes.
Register an account with an NPBFX broker and start trading profitably.