Gold Trading Introduction - XAUUSD Trading Online Introduction to Gold Trading

Gold trading online is gaining popularity among traders. XAUUSD is one of the financial trading instruments provided for online trading 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 market is open.

This liquidity has also led to setup formation of the trends in the price movement of gold. These trends mean that gold can be analyzed/interpreted using trading analysis & 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 platform.

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 online currency exchange trading market is the biggest financial trading market and the most liquid. This is why currency prices move in trends - due to this liquidity. The currency traders who trade forex use analysis to analyze the direction of these market 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, gold 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/gold using this price chart.

Gold 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 upwards 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/gold you'll have to learn how to interpret these market movements.

For example on our chart above we use the moving average cross-over system which is a combination of two moving averages and these 2 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 upwards 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 trades.

After the moving average crossed over each other the 2 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 downward.

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 center-mark prices are bullish, when RSI is above 50 center-mark it means that the prices are generally closing higher than where they open meaning the price movement is bullish. When RSI goes below 50 center-mark it shows prices are generally closing lower that where they opened meaning that 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 figuring out the direction of the market prices a trader then will 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.

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 transacted 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 transacted in the online exchange market represents 1 hundred0 ounces of gold.

Gold Prices

In the chart above the price of gold is represented on the trading chart. The price of gold will also have 2 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 online traders to determine which direction the price trend is likely to continue moving in. Traders will interpret the chart price movement using trading analysis & indicators.

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

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