Gold Trading Tips – Best Countertrend Strategy To Trade Gold Online
In gold trading, as in many other trading, trying to profit from countertrend moves is a totally different ballgame from long term directional trend trading.
When I do countertrend trading in gold trading, I like to look for violent trend reversal counter trend moves that signals the gold market has reached a significant top or bottom. One example is when the gold market plummeted from above $670 to %500 within a month.
Countertrend gold trading setup
As for the best setup for countertrend gold trading, my personal experience has showed that divergence in momentum is the most important. In other words, before I do any countertrend trading, I look for clear divergence signals that is developing in multiple time frames.
The second signal I’m looking for is some expansion in volatility in intraday trading, confirmed with candlestick patterns such as a doji or hammer that shows the current trend is exhausted.
Thirdly, I look for breakdown of a strong support or resistance on the chart setup.
Managing the risks in a countertrend move is very important. So I usually use day trading mentality for my countertrend trades. That means to say when a position is not profitable by the end of the day, I’ll close the position.
The trick to countertrend trade is to be nimble on exiting and taking profits. You can read more gold trading tips on how to succeed in online gold trading.
Having said that, I would strong advise long term investors to avoid doing countertrend trades, especially for gold trading as this is because long term investors must seek to profit from a trend.
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