5 Best Indicators Need To Know For Beginners To Trading Gold

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5 Best Indicators Need To Know For Beginners To Trading Gold

5 Best Indicators Need To Know For Beginners To Trading Gold– Trading gold as a commodity has high attractiveness. Gold has its own advantages compared to commodities or other trading instruments, such as forex, stocks and crypto.

The value tends to be more stable and the chance of increasing is greater if you look at it in the long term. While other trading instruments are prone to price fluctuations, gold’s performance looks more stable because demand for it in the market tends to increase, even if only slightly.

That is why, apart from being traded physically, currently gold is also becoming increasingly popular as a digital or online trading instrument.

5 Best Indicators Need To Know For Beginners To Trading Gold

As with trading instruments in general, gold as a trading commodity (trading) is also loaded with fundamental and technical insights to read, predict and understand movements or signals in the market.

Indeed, the fluctuations are not as big as other trading commodities, but analyzing gold price movements and knowing when to carry out buying and selling actions also requires a number of common indicators which so far have proven effective in increasing and maintaining profitability.

1. Moving Average

One of the most used trading indicators, the Moving Average (MA) is popular as a basic indicator that is simple and easy to implement. Many beginner traders rely on MA as a benchmark in reading market movements and looking for signs of change (reversal) or identifying gold price trends in the short and medium term.

As the name suggests, the Moving Average indicator recognizes some of the average (average) price positions in a specific unit of time and draws a line along these points to understand price movements that are occurring, as well as a marker of whether there is an uptrend (uptrend) or a downtrend ( downtrend) throughout the current range.

Periods that are often used in MA indicators are 15, 30, 50, 100, and 200. Understanding the signs shown by MAs gives a clear description of how the market works.

2. Exponential Moving Average

As an extension of the MA, the Exponential Moving Average (EMA) indicator provides confirmation of the thinking of recent prices. In technical terms, the Exponential Moving Average is a refinement of the MA calculation by adding a weight or multiplier to the MA time units. For example, the current MA selected is 20 days, then the basic EMA formula calculates the smoothing factor to be: [2/(20 + 1)] = 0.0952.

Then, the following average factor values ​​are calculated together with the previous EMA to get the most recent current value. This smoothing factor is the main factor as a multiplier in the exponential MA in other timeframes. With the calculation of weights like this, the Moving Average calculation becomes more accurate because the amount of average change from time to time can be clearly seen.

Many traders think that EMA is more sensitive to news or growth in the psychological condition of traders who are active in the market. Is there any news that can affect the trend of gold instantly? This can be shown by the movement of the EMA on the chart.

3. Fibonacci Retracement

Fibonacci numbers are obtained by multiplying the series of numbers in the Fibonacci Sequence, namely 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 84, 144, and so on. For example, the 23.6% ratio is obtained from dividing one number in the sequence by the third following it, where 8 / 24 = 0.2361. Meanwhile, the ratio of 61.8% is obtained by multiplying one number by the number next to it. So 8 / 13 = 0.618.

The Fibonacci ratio series usually consists of 23.6%, 38.2%, 50%, 61.8%, and 100%. These numbers form the basis for selecting Support and Resistance levels. To be able to display Fibonacci, traders don’t have to calculate manually, because the Fibonacci Retracement tool only has to be pulled from the highest and lowest price levels.

4. Relative Strength Index (RSI)

The next indicator that is also suitable for trading gold is the Relative Strength Index or RSI. Quite popular among traders and widely recommended for novice gold traders, the RSI indicator has the objective of determining whether an overbought or oversold level occurs, as well as selecting the area where it occurs.

RSI is often referred to as a momentum indicator, because it can calculate the amount of price changes or fluctuations that are currently happening in the market. In charts, the RSI indicator is mostly displayed as an oscillator or a line chart that moves between the 2 farthest points; up and down. The upper area is capped at level 70, but the lower area is mostly capped at level 30.

To calculate the RSI value, most of the time span seized is 14 days with an average profit potential of 1%. This also applies to gold commodities because trades can be calculated daily (intraday).

5. Bollinger Bands

The Bollinger Bands indicator is suitable for use by novice traders and is widely recommended as an appropriate tool in the technical thinking of gold trading. As used in various other instruments, Bollinger Bands in gold trading also expect to observe price volatility levels and current trend movements.

This indicator shows the standard deviation that can be calculated from the movement of the MA, with the standard deviation commonly used is 2.

In fact, this indicator can also be used to determine the overbought (peak) and oversold (bottom) levels of a trend. Knowing the Bollinger Bands distance will help traders choose to buy or sell.

When the bands are narrowed during a period of low volatility, this is a sign of a large price movement, whether it’s up or down. On the other hand, if the distance between the 2 bands is very wide, then price movements may be too large and difficult to predict. Gold traders can identify desired profit levels with the Bollinger Bands indicator.

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