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How to Trade Gold in Forex Markets: Strategies, Tips, and Tricks for Trading Gold on Forex🥇

How to Trade Gold in Forex Markets Strategies, Tips, and Tricks for Trading Gold on Forex

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How to Trade Gold in Forex Markets Strategies, Tips, and Tricks for Trading Gold on Forex
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The first time I heard gold was still a valid currency, I was a bit shocked. Paying for stuff in gold seems more like something a pirate would do, right? Well, it turns out that the time for gold is far from over; in fact, it’s thriving as a currency in the Foreign Exchange (Forex) markets. Trading gold on Forex is pretty widespread and especially popular in times of crisis where other assets are too volatile or uncertain. So, gold seems to be back in fashion, but how to trade gold in Forex? It’s simpler than you think and, in this guide, I’ll tell you all the insider knowledge you need to trade gold like a pro.

Before diving into instructions on trading gold on Forex, however, I suggest you take the time to set the record straight about some of the most common misconceptions about gold in Forex trading. First, we’ll take a look at just how profitable trading gold really is — does it even make sense to add it to your portfolio? Then we’ll go over some of the basic definitions of gold trading. Of course, they may be basics, but often, it’s the same basics that spell the difference between a successful trader and one that gives up early in the game. So, feel free to skip these introductory sections and jump ahead to instructions on how to trade gold in Forex, but only if you’re really in a hurry. 

What is Gold Forex Trading?

As you can guess, gold Forex trading is one of the terms that traders use to talk about trading gold on Forex markets. In Forex, every asset or currency is named with a three-letter code. For example, in Forex, USD stands for the United States Dollar, while EUR stands for the Euro. Gold is no different because, in Foreign Exchange markets, it’s treated as just another currency, and it’s given the code XAU. If you know the basics of Forex trading, you know that any trade involves a currency pair, like USD/EUR. When we talk about USD/EUR in terms of Forex, we mean trading one of the currencies (for example, USD) for the other (EUR) for a profit. So, when it comes to trading gold, you’re dealing with currency pairs like the XAU/USD. As we’ll see later, the XAU/USD pair is one of the best trading options available if you want to get into the gold game. Before continuing, let’s see if it’s even worth your time to learn how to trade gold in Forex in the first place. The XAU/USD (or XAUUSD, as it’s written in MT4) is basically a number that tells you how many US dollars you need to buy an ounce of gold or slightly more than 28 grams in metric. 

Is Trading Gold Profitable?

In a word, yes, but only if you know what you’re doing. Like any other asset, gold can rise or fall with more or less volatility, meaning its prices can move more or less suddenly than those of other assets on the market. Now, unlike your usual currency pairs like USD/EUR, gold is not as much affected by non-financial factors, so its fluctuations are easier to predict. We’ll go over some of the strategies that can help you make a profit from trading gold on Forex later, but basically, buying gold can be very profitable under the right circumstances. No matter whether you’re experiencing a bull market or a bear market, buying gold is a good idea in case the market is facing uncertainties with other assets.

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Become a Forex Trader👨‍💻|8 Tips for Starting Your Forex Journey

The recent COIVD pandemic is a remarkable example when it comes to gold. This precious metal increased by about 13% in just a few months in early 2020 because of all the instability caused by the pandemic. So, that’s why gold is always a great bet when it comes to investing with an eye to preserving asset values. Some consider gold to be a “safe haven” investment in times of high volatility since its value is only likely to increase in these conditions. The 13% increase in gold’s value may not seem much, but when you compare it against the freefall of almost all other forms of assets and stocks, it’s very impressive.

Can you trade Gold with Forex?

While some traders prefer to use gold and gold-related assets on the stock market (trading with the popular GLD, for example), Forex traders can turn to gold as easily as if it were another currency. XAU is a very fluid half to any currency pair, and the popular XAU/USD is one of the more predictable assets for trading on the Foreign Exchange markets. Of course, there are other gold-currency pairs, like the XAU/EUR, but the one trading against the US dollar is a safer choice. Basically, the XAU/USD is a typical example of a supply-and-demand asset in its fluctuations. So, if you’re a trader focusing on that kind of analysis, following XAU/USD signals will be easy.

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How to Trade Gold on MT4

You can use your MetaTrader 4 to trade gold just as easily as you would trade any other asset or instrument. Of course, you’ll first need to get a Forex VPS (read this intro on what a Forex VPS is and why you need it), then you have to install MT4 on your Forex VPS. Plus, your broker must support trading gold on Forex, but since most brokers already do, this probably won’t be a difference. Below I’ve included a section that will introduce the top Forex brokers that let you trade gold using your MetaTrader platform. So, if you’re still trying to decide on a broker, you can use that list to make an informed decision. 

3 Best Gold Trading Brokers in 2022 — What brokers let you trade gold on MT4

As I said, most major Forex brokers let you easily trade gold right on your MT4 platform, usually in the form of the XAUUSD pair. Naturally, just as in every other case, there are some brokers that are better than others, and in making this list, I’ve tried to only include the top brokers for trading gold on Forex. You should remember, however, that when it comes to choosing brokers, location is very important. If you’re far away from your broker, you’ll experience a considerable lag between the time you place your buy/sell order and the time it’s executed by the broker. That’s called latency, and one way to minimize it is to select a broker right next to you. There is no time to explain latency here, but you should definitely take the time and read this introduction to latency if you want to up your trading game. But what if you don’t live in one of the main financial centers of the world like New York City or Frankfurt? Well, you can either select a much worse broker, come to terms with high latency and slippage, or you could go with a Cloudzy Forex VPS. With servers at 14+ global locations in North America, Europe, and South East Asia, Cloudzy Forex VPS is the reasonable way of picking the best broker and getting minimum latency at the same time.

Let’s take a look:

  1. AVA TRADE

avatrade

The UK-based AVA Trade is always a great option for Forex traders, and it’s no different when it comes to gold trading.

  1. xtb online trading

Xtb broker

XTB is a European broker company specializing in Forex trading and it provides one of the best gold CFD trading platforms around. Make sure to visit them and see what they have in store.

  1. forex.com

forex.com

In the United States, Forex.com is one of the more popular choices for traders, and gold traders as well. So, check out their plans and services on their website.

How to Add XAUUSD on MT4

Knowing how to trade gold in Forex starts with learning how to add the necessary symbol to your trader’s MetaTrader 4 platform and how to start with Metatrader4. Usually, this is a very straightforward process, but sometimes, users are unable to find the right symbol, so I’ve decided to provide this short guide on adding XAU/USD on MT4. First off, make sure that your broker supports trading gold on Forex. If your broker is on our list of the top brokers that let you trade gold, you have nothing to worry about. In fact, most major brokers support this kind of trade, so it shouldn’t be a problem. Now, let’s get started.

Step 1: Opening Market Watch

The MT4 Market Watch is a vital feature of the platform that lets you select which currency pairs you’re monitoring. The first step to add XAU/USD is to open your Market Watch menu by selecting it from the View menu, clicking on its icon in the toolbar, or simply pressing CTRL + M. 

[MT4 View Menu]
[MT4 View Menu]

Step 2: Opening the Symbols Windows

Once you do enable the Market Watch on the left sidebar, you’ll be able to see a list of all the symbols you’re monitoring. Of course, the XAU/USD symbol won’t be among them. To add that, you must first right-click on the Market Watch menu, and select “Symbols” from the menu that pops up.  Once you do, you’ll get the Symbols window.

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[MT4 Market Watch Symbols window]
[MT4 Market Watch Symbols window]

Step 3: Adding XAU/USD (Gold vs US dollar)

Now, depending on what broker you’re using, the names of the asset categories will be different, but usually, you can find XAU/USD under metals, precious metals, or other such headings. Once you find XAU/USD, select it and click on the “Show” button on the window’s top right side.

Step 4: Place a Buy/Sell Order

Once you’ve clicked on “Show,” you can go ahead and click on the “Close” button to close the Symbols window. Now, the gold-vs-dollar symbol (XAUUSD) symbol will be visible in the Market Watch. When you click on XAUUSD, you’ll be able to see the corresponding chart to the right. Now, all that’s left is to place your order with the broker. To do that, double-click on the XAUUSD symbol to open the Order window. From there, you can simply add the amount you want to buy or sell and place the order by selecting either the “Sell by Market” or the “Buy by Market” buttons on the screen.

[MT4 Order Screen]
[MT4 Order Screen]

Gold Forex: Trading vs Investing 

TradingInvesting
Speculate on FluctuationBuy Upfront
RiskierSafer
Short-termLong-term
CFDAsset

The Best Strategies for Trading Gold?

  • Pick a Trading Time

Like many other assets on the Foreign Exchange markets, gold has an almost-24-hour market, meaning you can buy and sell almost any time you want. However, most of the trade takes place during the New York trading hours (just as it does with many other assets and instruments). Now, that means that during those hours, there is far more liquidity at less volatile prices. That makes the New York trading hours a perfect window for day trading as well as investments. If you’re trying to trade gold and are more comfortable with scalping rather than day trading, you should wait for the New York close, after which the prices become much more volatile, offering the boost you need for scalping to be possible.

  • Monitor Supply and Demand

Compared to many other assets (especially currencies), gold is easier to analyze, with supply and demand having a larger impact on the price than is common for other assets. That means one of the best possible strategies for successful gold trading is to simply monitor the supply and demand. Demand can come from two main sources: industries like tech and medicine, where gold is used in products, and the consumer sector, where there is a shifting demand for jewelry, which can affect the global gold prices.

  • Watch the Geopolitical Factors

Gold is not immune from geopolitical factors, but it is much less threatened by changes in the political order. When it comes to trading XAU/USD or other gold-currency assets, however, you need to think about how geopolitical factors are affecting the currency. If you find yourself looking for a safe haven investment, make sure to switch from an uncertain currency to gold, but be careful when trying to liquidate back into USD or any other currency.

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What’s the Best Time to Trade Gold in Forex?

As I mentioned before, the best time for trading gold in Forex is when there is uncertainty about other assets and currencies. That means the best use of gold is as a “safe haven” asset. But if you plan to trade gold regularly, then you need to consider your trading method carefully. It may be a good idea to start with scalping to trade gold in Forex. If you decide on scalp trading, you should be careful to do it at the close of the New York market, when the volatility rises to a point where scalping makes sense, even for a stable asset like gold. Check this article to discover the best time to trade Forex. Of course, if you use Forex trading signals, you can just leave this up to your signal provider. Before you do that, however, you need to read this guide on the best Forex signal providers.

How to Trade Gold in Forex Successfully

While choosing the best strategy and the best broker are crucial in successful gold trading, there are other factors no less vital to ensuring a good trade. Unless you’re interested in gold as an investment, you’ll need a way to quickly place your buy/sell orders, multiple close orders and avoid the high slippage risk of gold trading. Without a high-performance Forex VPS, however, there’s very little chance of the minimal latency connections you’ll need to make that happen. Cloudzy Forex VPS plans are optimized Forex trading tools specifically designed to give traders an edge. Using strategic placement at 14+ financial hotspots around the globe, ultrafast NVMe storage, and 1 Gbps bandwidth, our Forex VPS plans are the ideal way to take your gold trading to the next level.

FAQ

What is the gold symbol on MT4?

It’s XAUUSD, which stands for XAU (Gold) vs USD (United States Dollar). The numerical value of XAUUSD shows you how many US dollars you need to buy a single ounce of gold.

Can you trade gold in Forex?

Yes, easily! Most Forex brokers let you trade gold against major currencies like the United States dollar or the Euro. Simply look for the XAUUSD or the XAUEUR symbols on your broker’s MetaTrader platform.

Does it make sense to trade gold on Forex markets?

Yes, it does. While some traders and investors prefer to use the stock market to deal in gold and gold-related instruments, a lot of traders use Forex brokers to either invest in gold or speculate in it using methods like CFD.

Alex is a senior content writer and strategist with an interest in all things tech. He has been working in content for some years, before which he was engaged in academic research on literature and philosophy. He loves writing, logic, and challenging himself.

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