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Understanding Gold Market Dynamics | John Browne | Safehaven.com

Understanding Gold Market Dynamics | John Browne | Safehaven.com | Executing Trades | Scoop.it

To an extent that reveals a thorough misunderstanding of the market forces, the financial media has failed to consider the different motivations and beliefs that drive the different types of investors who are active in the gold market. By treating the gold market as if it were comprised of just one type of investor, analysts have drawn false conclusions about the recent volatility.

 

Broadly speaking, the gold market consists of long-term investors, which are comprised of primarily private individuals who believe in gold as a better store of value than fiat currencies, and short-term traders, who are primarily financial professionals looking to play on momentum trades. The groups invest with different time horizons and with varying goals. Those with a long-term view tend to see gold as a hedge against inflation and as security against financial uncertainty. They tend to buy both paper gold (in the form of ETFs), and physical gold (in the form of coins, bars and, in some cases, jewelry). The physical market is divided between these small buyers and the central bank bullion buyers who acquire gold as national currency reserves.

 

In contrast, short-term players, like hedge funds, mutual funds, and institutional day traders tend to be much more sensitive to trends and technical analysis. Trading effectively both ahead of and behind a particular asset price trend requires quick decisions and precise trade execution. To achieve this, these players tend to buy the vast majority of their gold in the form of easily traded ETFs. Certainly over the last decade, gold had established a clear upward momentum that such traders could not afford to ignore. To profit from this trade, participants did not need to care why gold was rising. A simple understanding of chart dynamics was sufficient ...


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Billion Dollar Day - a 1986 documentary about currency (forex) speculative trading

To apply to get funded to trade, please visit: http://www.fullyfundedtrader.com.
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Basics of Quantitative Trading

http://www.onestepremoved.com/ Shaun Overton speaks to the meetup group Dallas Algorithmic Traders about quantitative trading. Most members of the audience h...
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Harmonic Trading - Trade Execution Strategies for Harmonic Patterns

Scott Carney created the Harmonic Trading methodolgy, defining the rules for all harmonic patterns in his book, -The Harmonic Trader.- Since then, he has adv...
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Learn the SECRET to Trading Fibonacci

Learn the secret to trading fibonacci. Most people screw it up. Forex, Futures, Stock trading, it doesn't matter. You can use fibonacci retracements and exte...
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Profitable Trading Tactics for Day and Swing Trading

Originally presented on 10/1013 All stocks, futures, and ETFs create and opening range every day that can be used to build day trading and swing trading stra...
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