Saturday, December 12, 2020 11:41 AM EST
While XAUUSD is being volatile, there are some some benefits to trading the pair, but also danger because volatile pairs can easily change direction and activate stop loss.
If you put your stop loss too close it can happen that you end up with loss on your account. To avoid that problem it is good to put stop loss large enough in terms of pips, but maintaining the loss percentage acceptable to trading strategy.
That means, if you have stop loss set to 1% of your total account balance then you should adjust lot size accordingly. Making your account balance protected from large losses is one of the main aspects of good money management.
By adjusting lot size you can change the number of pips of each trade so it fits for the daily average. That means you can put stop loss with more pips, which will let the price have a wide pip range without activating stop loss on your trade.
Conclusion
What I'd like you to remember from this article is that XAUUSD is one of the most volatile pairs. Daily average pip range shows that you can have large pip movements and that you can be sure that pair will not be slow where you need to wait to find the opposite trader to make a transaction.
If you are a beginner in Forex trading what is good to know is that you should be very careful when trading XAUUSD. If you do not know how to set stop loss and lot size to protect your account, you should avoid this pair. It is better to use less volatile pairs like EURUSD or AUDUSD.
If you are an experienced trader then trading XAUUSD can be very profitable by trading it on a daily basis.
Anyway, as a last note I would like to say that each trader should know that trading with patience and discipline will lead you to success.
Photo by Dmitry Demidko on Unsplash
Disclaimer: Any Advice or information is General Advice Only – It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By ...
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Disclaimer: Any Advice or information is General Advice Only – It does not take into account your personal circumstances, please do not trade or invest based solely on this information. By Viewing any material or using the information you agree that this is general education material and you will not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here by author. Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, spot Forex, CFD’s, options or other financial products. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material provided by this author. The past performance of any trading system or methodology is not necessarily indicative of future results.
High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in Forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained in this article, is provided as general market commentary and does not constitute investment advice. I will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.
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Trading in gold and currency is clearly not for everybody. And this article explains a lot, so thanks a whole lot for the education.
You are welcome.
This pair is really fast and very often peolle enter into trade expecting to gain quick and large profit where they end losing a lot.