Have you noticed the price of gold lately? It has surpassed the $1,300 per ounce mark and continues to increase. Where will it stop? It doesn’t really matter, as Forex traders will tell you. As long as the price continues to fluctuate, foreign currency traders will use it as a strategy to make more pips.
Since the Dollar is no longer tied to gold, it fluctuates in accordance to demand and supply factors. However, a currency like the Aussie Dollar is directly related to the precious metal as its economy depends on the production and export of gold. This makes the AUD/USD a very attractive pair to trade with. As the price of gold increases, so does the value of the Aussie Dollar, though the USD loses its strength.
But don’t just watch the price indicators. Always have a chart that shows pressure and volume of currency sales. An RSI chart for instance, comes in quite handy for such analysis. With the proper information you’ll be able to invest and profit today.
With a commodity such as gold, the currencies will move large numbers of pips. So make sure you place the limit at 200 to 250 pips and your stop at 45 to 50 pips. Watch the trade and adjust the trailing stop as you capture profits. If you’re not familiar with this technique, go to the section on placing and exiting trades of your tutorial. And don’t skip the section on fundamental or technical analysis.
Related posts: