Gold is widely viewed as a safe-haven asset amid market turmoil. The same is true when trading spot gold in the foreign exchange market. Regardless of whether the price of gold rises or falls, traders can still invest to make a profit.
This may lead some investors to believe that gold is inherently speculative. Still, many investors prefer to invest in gold. In fact, it is a complex asset because its price is affected by many factors; and traders need to think carefully and think twice.
Traders who want to profit from gold trading need to have considerable knowledge and understand the various factors that lead to gold price fluctuations. Both technical and fundamental factors are used to improve the accuracy of trading.
We have provided fundamentals to assist traders to profit from gold trading. Therefore, here are some strategies that may help you as a trader to make more accurate trading strategies and improve your ability to make profits in the process.
Fibonacci retracement is one of the more popular tools used when trading. However, some may not be aware of it and how to use it to help trade profitably.
Fibonacci retracements are a technical tool that assists traders in identifying where a potential trend reversal may occur.
In terms of horizontal lines, these are also commonly used to identify strategic locations for support and resistance, stops and price targets. Because Fibonacci retracement levels present static prices, traders and investors can react quickly when price levels are likely to break or reject.
To determine where these lines are located, the highs and lows on the chart must be identified. The goal is to determine how much the price will move in the trend before the trend resumes.
Fibonacci retracements work on the principle that price retraces to some of the distance it covers.
Charles Dow suggested retracement rates from 33% to around 66%. Ralph Nelson Elliott further refines the Dow view and provides more accurate retracement levels.
But why are these retracement levels so important to traders and investors? Because they indicate a potential up-down reversal. For gold traders, once a retracement level is reached, the price of gold tends to stop moving.