Gold Trading Introduction - XAUUSD Trading Online Introduction to Gold Trading

Gold trading online is gaining popularity among traders. XAUUSD is one of the financial instruments provided for trading online that a xauusd trader can choose.

With this popularity it means xauusd as a financial instrument is liquid enough to be traded on the online trading markets. Because of the many traders are now trading this metal online it means there is always someone willing to buy or sell their gold contracts at any time of the day when xauusd trading market is open.

This liquidity has also led to formation of trends in the price movement of gold. These trends mean that gold can be analyzed using trading analysis and traders can determine which direction the market price of xauusd is likely to move in.

XAUUSD now is liquid enough to be traded as a trading instrument in the online trading market & this has led to many online brokers providing xauusd as one of the financial instrument that traders can trade through the broker's online trading platform.

The main online brokers offering xauusd as a financial instrument which can be traded are forex brokers. FX brokers have been providing currency trading services to traders because the currency exchange market is the biggest financial market and the most liquid. This is why currency prices move in trends - because of this liquidity. The currency traders who trade fx use trading analysis to analyze the direction of these trends and then place trades on the currency market so as to earn profits from this price movements.

Now that gold has gained a lot of popularity, xauusd prices now also form trends which can be traded and analyzed. This liquidity in xauusd has led to the formation of these price trends. The liquidity also means that there are enough traders willing to buy or sell at any time when the gold market is open.

The chart below shows the price chart of gold. Traders will trade xauusd using this price chart.

XAUUSD Trading Introduction - XAUUSD Trading Online Introduction to XAUUSD Trading

XAUUSD Price Chart

About XAUUSD Trading Charts

From the chart above a trader can quickly determine the direction of the xauusd prices from the price movements.

The first part prices are moving upwards in an upward trend, then they begin to move down in a downward market trend and then finally the prices move upward in an upwards market trend.

As a beginner wanting to trade xauusd you will have to learn how to interpret these market movements.

For example on our chart above we use the moving average crossover trading system which is a combination of two moving averages and these two moving averages are used to show the direction of the market trend.

If both moving averages are moving upward then the direction of the gold prices is in an upward trend. In an upwards trend a gold trader will buy gold and make profit as the prices of xauusd continue heading upwards.

The moving averages will also show when the trend is changing direction. In the example above when the two moving averages stop moving upwards & cross over each other this shows the upwards trend has reversed & traders should close out all their open trade transactions.

After the moving average crossed over each other the two averages then changed their direction and started heading downwards. In a downwards trend a gold trader will sell gold & make profit as long as gold prices continue to move downwards.

In the above example there is also the RSI indicator. This xauusd technical indicator has a center line marked 50, when this technical indicator is above the 50 mark prices are bullish, when RSI is above 50 mark it means prices are generally closing higher than where they open meaning the price movement is bullish. When RSI goes below 50 mark it shows prices are closing lower that where they open meaning the prices are bearish.

Technical Analysis of XAUUSD Trading

In xauusd trading traders will use trading analysis and indicators like the ones shown above to determine the direction of the market prices. After determining the direction of the market prices a trader will then open trades in the direction of the market trend.

If the trend is upwards then a gold trader will open buy trades & if the price trend is downwards a xauusd trader will open a sell trade transaction.

Buying is referred to as going long and selling is referred to as going short.

Traders can make profit when the market is trending upwards or downwards. When the market is trending upwards a trader will buy xauusd - this is known as going long. When the market is going downward a xauusd trader will sell gold - this is known as going short.

Trading Gold Contracts

In the online market gold is traded as contracts, no physical gold is exchanged. When it comes to contracts - one xauusd contract is equivalent to 100 units.

If the unit used to measure gold is ounce, then one contract of gold that is traded in the online exchange market represents 100 ounces of gold.

Gold Prices

In the chart above the price of gold is represented on the trading chart. The price of xauusd will also have two decimal points and this is the format used to quote the price of gold.

Gold Charts

The historical prices of gold will be used to draw a chart. This price chart is then used by traders to determine which direction the price trend is likely to continue moving in. Traders will analyze the chart price movement using trading analysis & technical indicators.

The xauusd chart is the main tool used to trade gold.

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