More and more forex traders are discovering gold lately. Whilst for many years it was very clear that most of the transactions include the EUR/USD, GBP/USD and the USD/JPY pair, lately it seems that the major trading volume has shifted from the major currencies to gold. In order to help you make higher profits from your trading, here are some hints and pointers:

1. Take it easy, gold is an extremely volatile instrument. How volatile you ask? Here is a little example that will help you understand. In an average minute, the EUR/USD pair moves around 3 to 5 pips. Gold, on the other hand moves around 50 pips, per minute! So please, consider that while trading, and do not over expose yourselves.

2. When trading, make sure you do not base your strategy merely on gold. Because gold is valued in dollars, the fluctuations of the dollar have an immense impact on gold. The best way to use this influence is to follow the EUR/USD pair, as it reflects the Dollar’s strength better than any other pair. In the long-run, you’ll see a mechanic resemblance between the two.

If you managed to implement the first guidelines you shouldn’t have any problems to utilize these as well.

3. You need to decide whether you want to be trend followers or range-trading traders. If the trend is what you’re looking for – then don’t swing in before you see a clear trend, like the one that rushed gold towards $1,065 an ounce just a week ago. If you wish to engage on range-trading then do what I did in my previous article and draw a few significant levels and follow them.

4. Do not, and I repeat, do not leave your computer without setting stops and limits. Gold can rise or drop 500 pips in a few moments. Taking this risk does not make any sense, so simply avoid it.

5. Follow our analysis, and try and read as much as possible on gold. I know that some of you use technical analysis, so you think that the fundamental is irrelevant – you’re wrong. We publish data on gold quite frequently, use that information.

That’s it for now. I hope I helped some of you with your trading styles. Either way, remember that it’s o.k. to lose now and then, as long as you have a plan, and you’re not entering random trades, eventually you’ll do fine.