Trade Gold and Silver with LMFX
The LMFX gold and silver contracts give you access to the precious metals markets 24 hours a day, 5 days a week.
With prices in both these products being quoted in the EUR and USD base currencies, you are able to remove any currency impact on your trading account allowing you to profit from the movement in the market.
On LMFX MT4 platform, you can invest in the following precious metals.
- XAGEUR (Gold vs Euro)
- XAGUSD (Gold vs USD)
- XAUEUR (Silver vs Euro)
- XAUUSD (Silver vs USD)
Trading gold is not an easy topic, because the movement of precious metals is not the same as other commodities or currency pairs in the Forex market. However, there are some well-known strategies that can be used to achieve success in gold trading.
News trading on Gold markets
Apart from the usual statistics, gold is affected by economic and political factors, disasters in the world, terrorist attacks, and crises. The reason is that gold has strong links to a wide variety of markets: equities or raw materials.
The dynamics of gold prices do not follow the logic in general. Trading based on news can be successful only if there is a very important event or news. It is highly recommended not to open a position immediately after the event occurs, because you will not know where the price will move. For example, a tremendous crash in the equity market sent the price of gold up. As a result, you can open long positions.
Fundamental trading strategy: correlation
It’s no secret that gold has a negative correlation with the US dollar. This means that gold and the US dollar are moving in opposite directions. A buy signal for gold means a sell signal for USD and vice versa. The good thing to know is that if one of the forms ahead of the other, then there is a good chance that you could make a profit.
The following is a strategy for trading gold using the USD correlation.
- First open the gold price chart and the USD chart with the cross currency pair (eg USD/JPY ) in your trading terminal at the same time. You must set the same timeframe for both charts (example H1).
- Second, determine the main support and resistance levels on both charts and wait for the breakout. In addition, look at the shape of the candlestick to find out the direction of the next price movement.
Note, sometimes you can find the resistance line on the USD/JPY chart, but can’t find or see the support level on the gold chart. However, a breakout of the resistance on the USD/JPY chart will be followed by a sell signal on the gold chart. Therefore, if the USD is strong in USD/JPY, then it is a sell signal in gold.
At H1 on the USD/JPY chart, a bearish candlestick is formed. This gives a strong signal to buy gold. If the trader takes this opportunity, then he can get a big profit from rising gold prices.
On the other hand, gold has a positive correlation with AUD/USD. Australia is known as one of the largest gold producers in the world. This is why the Reserve Bank of Australia must maintain gold reserves. Gold reacts to Australian fundamental data or changes in monetary policy made by the Reserve Bank of Australia. In the figure below, the decline in interest rates in 2016 led to the sale of gold.
Seasonal trading strategy
Gold price movements are correlated with seasonal patterns. Gold can strengthen at some times during the year and weaken at other times. This period repeats itself at the same time in the next year. Gold tends to rise in the first quarter and also in the last month for 1 year.
- The first step to buy gold is when the price of gold tends to rise. Usually occurs at the beginning of the year (in January and February).
Wait for the next confirmation, based on the technical figures, oscillators (MACD, RSI), and the candlestick shape of the potential price reversal.
- If gold follows a seasonal pattern in January, then you can open a long position.
- Take profit before the end of January. Keep in mind that if gold follows a seasonal pattern in the first month, it is likely that the seasonal cycle will continue. March is the worst month for gold trading, so it is better to close positions before March according to seasonal patterns.
The natural aspects of gold require special trading techniques. You can use a correlation strategy or a fluctuating seasonal strategy. But remember to consider all other factors, which can affect gold. This will save you from risk and make your trading more profitable.
Comparison of LMFX’s all trading account types
LMFX has 3 trading account types which are Fixed, Zero and Premium.
See the comparison of these 3 trading account types below and choose the right account type for your trading strategy.
|Minimum Spread||Fixed from 1.8 pips||From 0.0 pips||From 1.0 pip|
|Minimum Deposit Amount||$250||$100||$50|
|Trading Commission||None||4 USD per lot||None|
|Account Currency||USD & EUR||USD & EUR||USD & EUR|
|Available Markets||Forex, Gold, Silver, Oil, Indices, Share CFDs and Commodities||Forex, Gold, Silver, Oil, Indices, Share CFDs and Commodities||Forex, Gold, Silver, Oil, Indices, Share CFDs and Commodities|
|Max Trading Volume||75 lots||100 lots||60 lots|
|Max Number of Open Trades||150||200||100|
|Margin Call %||30%||50%||50%|
|Stop Out %||15%||20%||20%|
|Account Registration||Open Fixed Account||Open Zero Account||Open Premium Account|