Gold is one of the most common and rewarding metals you can choose to trade. With the right trading strategy and spread-betting platform, trading gold more or less resembles Forex trading.
Gold trading strategies are diverse and primarily encompass fundamental, sentimental, and technical analysis. In addition, gold is usually priced in US dollars, which helps in market analysis. Therefore, we will examine why you should trade gold and some strategies to exhaust for maximum returns.
One of the biggest problems for new traders is calculating gold and calculating pip value for gold.
Pips in gold
Pips in gold assets represent a price movement of 0.01 for most MT4 and MT5 brokers, while for currency pairs, a pip price movement is 0.0001. For example, when gold prices move from 1851.70 to 1851.71, it is 1 pip movement.
Below is presented 22 pips difference between the bid and ask price for gold assets.
How to calculate gold pips?
To calculate gold pips, you must know that 1 pip gain represents a 0.01 move in the gold asset. So, for example, when the gold price changed from 1851.70 to 1851.71. it is 1 pip move. However, if the price moves from 1851.00 to 1852.00, it is 100 pips move.
Calculating pips for gold is a process we need to calculate in the first step number of pips. For example, for gold or XAUUSD, 1 pip has a value of 0000.01 for 5 digits brokers, but it is different for 4 digits brokers. How to read pips on gold, then?
How to Read Pips on Gold on the MetaTrader platform?
If we trade gold on the Metatrader platform, 1 micro lot trading size for 100 pips is $1. If we buy 1 micro lot from 1693.00 to 1694.00, it is $1 or 100 pips. If we buy 1 mini lot from 1693.00 to 1694.00, it is $10 or 100 pips. Finally, if we buy 1 lot from 1693.00 to 1694.00, it is $100 or 100 pips.
XAUUSD pip count Table:
|XAUUSD pip count||Pip value per 1 standard lots||Pip value per 1 mini lot|
|XAUUSD||1 USD||0.10 USD|
|XAUEUR||1 EUR||0.10 EUR|
When we trade the gold, instead of calculating the number of pips, XAUUSD pip count, we ask how many cents (dollars) XAUUSD or gold is going up or down. In Metatrader, traders calculate gold pips based on dollars and lots.
Watch the video on how to calculate pips for XAUUSD below:
Calculating the dollar for gold trading is easy when changing the number of pips and lots.
One of the best tools for Gold Pips analysis and prediction calculation is TrendSpider Machine Learning’s automated technical analysis software.
Above is presented how Trendspider detects Gold price trends.
How to calculate gold pips when gold is traded in ounces?
Gold can be traded in ounces on some trading platforms instead of lots. For example, if you buy 20 ounces of gold at an entry price of $1400 and take a profit value of $1401.33, you can earn 20 ounces* 133 pips = 2660 pips because from $1400 to $1401.33 are 133 pips.
To convert ounces into trading lots and dollars, remember:
- 1 ounce of gold (XAUUSD) is 1000 units or 1 micro lot with a pip value of $0.01.
- 10 ounces of gold are 10,000 units or 1 mini lot with a pip value of $0.1.
- 100 ounces of gold are 100,000 units or 1 standard lot with a pip value of $1.
If we trade gold on different platforms than Metatrader, where trading is not in lots than in ounces (oz), then we have:
*For Gold: Position Value in GBP / Price of Gold / 100 oz = Volume or contract size in lots
*For Silver: Position Value in GBP / Price of Silver / 5000 oz. = volume or contract size in lots
To give an example:
*For Gold as example: £50000 / 1293.40 / 100 oz = contract size of 0.38 lot
*For Silver as an example: £50000 / 19.5340 / 5000 oz. = contract size of 0.51 lot.
Similarly, as described in our article, crude oil pips can be calculated.
How to count pips on gold?
The best way to count pips on gold on Metatrader is to remember that $1 is 1 micro lot for 100 pips. So, in the same logic, 1 mini lot trading size for 100 pips is $10, and 1 lot trading size for 100 pips is $100. So, for example, 1 lot gold forex trading size for 1 pip is worth $0.1.
Let us give one example:
How to count 50 pips in gold?
To count 50 pips in gold, you need to remember that 1 micro lot for 50 pips target is $0.5. Thus, 1 mini lot for 50 pips target is $5, and 1 lot for 50 pips target is $10. Most forex MT4 brokers have this calculation. However, some brokers calculate gold pip in different ways.
How to calculate pips for XAUUSD?
To calculate pips for XAUUSD (gold), you need to know that 1 pip gain represents a 0.01 move in XAUSUD (gold). So, for example, when XAUSUD price changes from 1834.00 to 1834.01. it is 1 pip move. However, if the price moves from 1834.00 to 1835.00, it is 100 pips move.
How to calculate 1 lot XAUUSD?
1 lot XAUSUD you can count as $0.1 for one pip move. So, for example, if you buy 1 lot XAUSUD, and the price goes from 1800.99 to 1801.99 (100 pips gain), you will make $100.
How to calculate lot size for gold?
If you calculate 1 lot size of gold in Metatrader, it has 100 000 units, and 1 pip of movement is worth $1. For example, when the gold price goes from 1800.00 to 1800.01, this 1 pip move for 1 lot is worth $1. If the price goes from 1800.00 to 1801.00, this 100 pips move for 1 lot of gold worth $100.
What is XAUSUD leverage?
The XAUSUD leverage is the minimum margin requirement for the trader, so if your leverage is 1:100, you can borrow 100 dollars for every dollar you have in your Gold trading account. So, for example, if your leverage is 1:100 and you have $1000, you can control your $100 000 investment.
Why trade gold?
Times have changed, and so has the gold trade. Before, traders had to buy the metal and later resell it, which proved challenging. Futures and options were then introduced, where traders traded without ending up with a complete set of different valuables. As time progressed, Gold exchange-traded funds came, making trading more comfortable. Gold traders traded gold the same way stocks are sold in the forex market. By far, we have the best approach to the gold trade. Nowadays, the gold trade and forex trade are more or so similar.
Spread-betting platforms have made gold trading one of the most straightforward ventures. Like currency trade, all you have to do is buy or sell, depending on the price predictions. One of the gold trade advantages is that, unlike the currency, you are dealing with a physical commodity. Another reason you should trade gold is that it is mainly used as a store of value. Finally, unlike the currency, it is not subject to many government regulations.
Gold trading strategies
There are several strategies you can employ when trading gold. Some of the most common include studying the market forces, positioning of gold traders, the technical analysis, which is quite demanding and using a gold chart in the research. However, the best strategy combines technical analysis, fundamental analysis, sentiment analysis, and the gold chart.
The sentimental analysis allows traders to spot trends, whereas the gold table determines when to enter and exit a trade.
Advantages of trading gold over forex
Gold trading advantages are that price is not correlated to inflation, and supply and demand have the most critical impact on the gold price. Gold trading has its fair share of advantages that forex trade cannot meet. Gold is not affected by the government’s financial controls or Central bank regulations since it is mainly used as a value store. This means that gold is rarely affected by inflation, which is one reason why many currencies have been rendered worthless.
Gold can also be a safe and vital asset, including treasury bonds and currencies like the Japanese Yen and the Swiss Franc. Instead of worrying about risky trends, a trader can rest easy by acquiring gold and other assets. You can also sell these assets when the risk appetite grows instead of going for stocks and currencies with unfavorable interest rates.
Gold is actively traded 24 hours a day, which gives it an edge over foreign exchange. Different markets close after New York completes forex trading, reducing trade volume and price movements that the traders can take advantage of. On the other hand, gold exchanges happen all the time, which gives this precious metal high liquidity.
Trading gold is cheaper than currency trade because it heavily leans market liquidity. As a result, gold records the highest trading volume compared to all the currency pairs. There is also a slight difference between buying and selling prices.
What you need to keep in mind
Unlike the associated assets, gold is traded chiefly against the US dollar, which implies that the dollar’s value will indirectly influence the price of gold. When there is an increase in the value of the US Dollar, the cost of gold falls.
Gold trading strategies
Technical analysis is one of the most common gold trading techniques. It entails studying the gold chart and identifying the changes in market conditions. The period between 2005-2015 recorded a sizeable trend. However, from 2015, gold has recorded a predictable range, mostly $400. The best approach for trending markets is to use a momentum strategy, whereas a range strategy suits a range-bound need.
How do I use the technical analysis technique?
The best way is to take advantage of the former highs and lows in the gold chart, trendlines, and chart patterns. One should note a rise above the current level during an increase in price and a fall above the current during a price decrease. To establish resistance, look at the line connecting the previous highs for an uptrend.
For a downtrend, look out for the lines connecting the former lows. Since technical analysis also requires noting the chart patterns, do not miss the tops’ double bottoms. As you progress in the technical analysis method, feel free to incorporate momentum indicators and more challenging prediction techniques.
Tips that you can take advantage of when trading gold.
Whether you are a beginner or an advanced gold trader, you can exhaust tips for maximum returns. However, for the fundamental analysis technique, a beginner should consider the market sentiment and the direction it is likely to move. Positive movement signifies a fall in prices and a negative price change.
An advanced trader should also consider the dollar on top of the market sentiment analysis. Since gold’s dollar price has stayed stable over time, such a trader can buy gold when political factors threaten and sell it later. Such traders should also take note of the output figures from the primary gold companies.
You should also apply the forex trading tips. In addition, factors such as risk management, targets, and leveraging should be taken into account. Before buying gold, make sure that you consider the industrial demand for gold and gold jewelry. It would be best if you looked out for the Central Bank too.
Gold trading Insurance -Market Leading Insurance
When you trade gold, it is essential to trade using regulated forex brokers like HF Markets, which has made efforts to safeguard its liabilities against Clients and other third parties with a Civil Liability insurance program for a limit of €5,000,000, which includes market-leading coverage against risks such as errors, fraud, omissions, negligence.
Gold pip calculator
The gold pip calculator is presented below. Please add the size and the number of gold pips to see the worth in dollars:
Trading Gold in Different Ways
As we have mentioned earlier that you can always trade gold physically. But, if you are planning to do it electronically, there are different ways of doing that. You can trade gold ETFs or Exchange-Traded Funds, gold CFDs, gold futures contracts, and more. If you are doing electronic trading, you need to find a good trading platform to enter a trade and profit. If you plan to do it in a significant volume or are new to it, it is advisable to work alongside a broker.
When we trade gold, the crucial thing is that we need to know to calculate pips for gold and calculate profit in dollars because it is not the same as we trade forex. You should, however, make some considerations before buying and selling gold. Me sure, therefore, that you use both the fundamental, sentimental and technical analysis techniques.