Trading Gold with Stochastic and RSI Indicators
Gold is one the most profitable asset which is now traded in the financial market. In the eyes of untrained day traders, the price movement of gold will be much more complex than that of currency pairs. Some of the best tools for trading these market events are offered by Swiss forex broker and market research leader CornerTrader.
But by following a simple and effective trading strategy using the Stochastic and RSI indicators many new day traders are making consistent profit. It is often said that these two indicators are the best indicators that day traders can use while trading the gold. Since the Stochastic and RSI is a leading oscillator it will take a little bit of time for the new trader to perfectly master the art of reading the oscillator value.
Let’s see an example how professional day traders use Stochastic and RSI indicator to trade gold.
Figure: Trading the gold with Stochastic and RSI Indicator
Professional day trader uses Stochastic and RSI indicator to find the overbought and oversold condition of the gold. When both the indicators are in the overbought or oversold condition they cautiously examine the chart key support and resistance level to take the trade. If both the indicator signal oversold in the key support level then day trader go long in the gold trade. On the contrary, the oversold condition of the indicators in the key resistance level triggers the short trade for the day traders. It’s imperative that that traders look for confirmation from both the oscillator before taking the trade. Taking the reading from a single oscillator doesn’t seem to work at all while trading the gold with this strategy.
Some professional traders also look for price action confirmation signal in the key resistance or support level before taking the trade by using these two indicators. Candlestick confirmation pattern in the key level helps the trader to take the trade with tighter stop loss. Though the system is very profitable but the use of proper money management is must when trading this asset.