Simple trading with gold. Undoubtedly, the Forex precious metals market has always been a great option to consider if you have a clear strategy by which we can maximize the benefits of each transaction by diversifying and expanding our portfolio.
Basically, metals such as gold and silver are traded through futures or CFDs with leading brokers such as Tradear. However, let’s not forget that such transactions require good leverage management and involve, as we know, a risk that can sometimes be very high.
For this reason, in this article we will introduce you to a simple strategy using gold using ETFs such as IAU, one of the best between SGOL, GLD and PALL, and will identify some important questions before explaining the strategy.
This is a group of values that you will trade with. Although working with ETFs does not exempt from losses, as traders give us the opportunity to work with them much better than if we had only one share.
How to account for liquidity with gold?
Even with ETFs, the liquidity that accounts for the volume of gold traded, its buyers and sellers, is an important indicator that we should take into account when trading gold. If there is more liquidity, the scenario may be more favorable to us because the gap between the price we want to get and the price they give us is smaller.
On the other hand, if there is a lack of liquidity, it is not recommended to start trading as the difference between the desired price and the given price can be terrible and it can lead to serious losses. For example, a clear sign of a lack of liquidity is the most spotted candlestick grid, and their shadows reach the same points.
What is TER and its relationship to ETF?
TER is an acronym from Total Expense Ratio, a value that allows us to quickly see the commission charged by the ETF manager to balance the ETF and compensate for fluctuations caused by liquidity. The more liquidity there is there, the lower the TER and the better it will be for us, as it will allow us to more comfortably execute the strategy described below.
In favor of an uptrend – Simple trading ?
If the metal in question follows an upward trend, then we should choose long if there are no breakthroughs, but first there are some considerations.
We could have bought, yes, but for important support other than gold, if it had previously been contained in a triangle, with a gap upwards or with a false gap downwards, we should have been able to buy taking into account the support.
If we can do this, then bearish breakthroughs of important support that are well managed can give important dividends, but if the conditions are not created, there is no need to ask the question.
Too much to explain this strategy. We hope that this has been useful. As a final piece of advice, let us analyze the operation well, because not everything is as obvious as it seems and modify the strategy according to the situation.