Scalping XAUUSD is a strategy applied by many professional investors. With this strategy, traders can quickly identify support and resistance levels and place trade orders. The article below will help readers better understand the principles and how to use the Golden Scalping method. Let’s take a look at Forex Trading.
Learn the XAUUSD Scalping method in technical analysis
Before learning in detail how to effectively apply Scalping XAUUSD, traders need to understand some characteristics of this trading method.
What is the Scalping strategy and Scalping XAUUSD?
Scalping Forex strategy is known as a “surfing” trading strategy. In which, investors will place orders quickly. The time from opening an order to closing an order lasts only a few seconds to a few minutes. This is a short-term and regular trading method, the aim of which is to make many small profits in one day.
The XAUUSD Scalping strategy is similar to the regular “surfing” method. However, traders will invest in gold in the Forex market to gain a lot of profit from small changes in the price of the product. Maximum order opening and closing time is 15 minutes. Traders will not hold orders overnight when applying this strategy.
RSI in the gold Scalping trading strategy
RSI is a technical analysis tool that plays an important role in the XAUUSD scaling strategy. So what specifically what is RSI index that many investors apply to Forex trading?
RSI is also known as the relative strength index, belonging to the group of momentum oscillators. RSI always closely follows the movement of price action. Using this indicator in trading will help investors identify overbought (RSI is blue) and oversold (RSI is green) conditions.
In Scalping XAUUSD, RSI acts as a signal filter. Thereby, you can know when is the right time to enter buy, sell, stop loss, and take profit orders. By monitoring and analyzing the RSI indicator, traders will place buy orders at low levels and sell orders when they see peak prices.
When should I use Scalping XAUUSD?
To earn a lot of small profits, traders can apply the Scalping strategy when investing in gold in the following two cases:
- Short-term trading: This case identifies the short-term trend of gold prices in the market. Trading time can last for 1 hour, 2 hours, one session, or one day. Depending on price fluctuations, traders can buy and sell gold at each trading hour. If you want to make quick profits from short-term investments, you should not ignore Scalping XAUUSD.
- Trading gold scalping: Using the Scalping Forex strategy to trade gold scalping helps investors limit potential risks. Besides, you should also apply technical analysis methods to predict short-term gold price trends and invest reasonably and effectively.
See more: Be more successful through this technical analysis
Analyze the principles of using the XAUUSD Scalping strategy
Scalping XAUUSD trading needs to follow certain principles. If you just randomly and spontaneously place orders to buy/sell gold, you may lose your initial investment, or even fall into a “burned account” situation.
Find support and resistance levels and place a buy order
The principles of applying the gold surfing strategy to buy orders are as follows:
- Traders need to determine resistance areas based on support and resistance levels on the price chart. These resistance zones are shown in green.
- After finding the resistance level, investors need to wait for the candlesticks of the trading periods M1, M5, and M15 to close above the resistance level.
- After the price chart surpasses the resistance level and the candlestick closes, place a buy order immediately. The stop loss point is set at about 5 – 7 pips higher than the entry price.
- Determine a profit target of only 7 – 10 pips per trade, do not set the profit target too high.
See more: Broker IC Markets and interesting revelations
Apply XAUUSD Scalping to place sell orders
Similar to buy orders, when placing sell orders you should note the following:
- Based on the support and resistance levels on the price chart find the support zone.
- After that, the trader needs to wait for the candles of the trading periods M1, M5, and M15 to close below the support level.
- After the candlestick closes below the support zone, traders need to enter a sell order immediately. The stop loss order is placed 5 – 7 pips higher than the initial order price.
- The profit target when entering a sell order is 7 – 10 pips per trade.
How to apply Scalping XAUUSD in technical analysis
To effectively apply the scalping gold trading strategy in Forex, traders can refer to the following methods.
Create a system network
Traders should set the parameters according to the instructions below before using the XAUUSD Scalping method. This will help increase accuracy when placing trading orders.
- Trading time frame: You can choose time frames such as M1, M5, and M15.
- Setting platform: MT4 or MT5.
- Display related indicators in the price chart: Use indicators including moving average, fast line, slow line, closing price, and opening price.
Enter the XAUUSD Scalping trade at the right time
To determine when to place an order, traders can consider the following factors:
- Based on the differences between price charts, trade sizes, and parameters on each software, traders can set up their strategy.
- Each set of parameters when performing a gold Scalping trade should have its own set of settings.
- Traders can combine many different technical analysis methods to achieve high efficiency when trading.
Comply with the conditions of the trading strategy
Besides the RSI indicator, the scalping gold trading strategy also uses Scalper Buy-Sell. This is an extremely popular short-term payment instrument. Investors can determine buying and selling conditions through these two specifications.
Signs of selling conditions:
- The Buy-Sell Scalper tool turns red when the market price stops moving and remains unchanged.
- RSI filter (RSI filter) is blue.
- The arrow symbol pointing down.
If the above conditions are met, the trader can sell the asset. Note that you need to place a stop loss order above the current buy and sell levels, and take profit when the indicator turns blue.
Signs of buying conditions:
- The Buy-Sell Scalper turns blue when the price stops moving and stays the same.
- The RSI filter is green.
- The arrow signal points up.
Traders can buy assets if they meet the above conditions. The stop loss order is placed according to the Scalper trade at present. When you see the indicator turn red, place a take profit order.
Conclude
Through the above sharing, traders have a better understanding of the principles and how to apply Scalping XAUUSD in Forex trading. If you want to invest short term and earn daily profits, this is the right trading strategy for you. Don’t forget to visit Forex Trading to update more new and useful knowledge.
FAQs
Here are some frequently asked questions about the XAUUSD Scalping strategy in Forex.
How should capital be managed when applying the XAUUSD scaling strategy?
To prevent risks, you need to divide capital into multiple payment packages and distribute them to different transactions. At the same time, limit the use of multiple payment leverage. Besides, you should also create a table to record profits and losses after each transaction to have a reasonable investment plan in the future.
What are the limitations of the gold surfing strategy?
This strategy requires high concentration and quick reflexes from investors. If you do not react promptly to market fluctuations, the risk of losing money is very high. Less experienced traders often encounter difficulties when prices tend to reverse. In addition, the daily trading volume is very large, so you will have to pay a lot of spread fees. To save costs, you should choose an ECN broker with competitive commission fees.
Why should you prioritize trading on a demo account?
Practicing on a demo account will help traders better understand indicators and become familiar with market signals. Besides, the payment method of the demo account is also very convenient for traders.
