Gold Trading Demo Account - XAUUSD Practice Gold Trading
For any trader wanting to start trading gold online, the best way to start is by using a demo practice account. This way a trader will learn about how to open and close Gold trades, how to open Gold charts and place technical indicators on the gold charts and also get to know about the leverage and margin used to trade gold and how to use money management so as to manage trading with leverage.
The first thing a trader should learn from their demo account is how to determine the direction of the gold prices so that they can know which side of the trade to take.
There are two market directions up or down - when prices are moving upwards a trader will buy gold and when they are moving down a trader will sell gold. The example below shows you how to determine an upward market direction and a downward market direction.
How To Open Buy Trade
A trader will determine when to open a buy trade by using the gold price chart and placing technical indicators on this gold chart. Technical indicators are tools that calculate the market direction and the momentum of this market direction.
For example the trade below is a buy trade - we shall explain how you can determine this for yourself when trading.
The first thing that can be interpreted from this chart is that the direction of the prices upwards. As a trader you also need to use a few indicators so as to get more information about this upward trend.
The two indicators placed on this chart are the moving averages and RSI.
The two moving averages form a trading system that is known as the moving average crossover method. A signal is generated once the two moving averages crossover each other and both start to move in the same direction. There is a shorter period moving average and a longer period moving average such as the 5 day moving average and seven day moving average that has been used above.
- When both moving averages are moving upwards the trend direction is upwards
- When both moving averages are moving downwards the trend direction is downwards
The second indicator is the RSI; RSI indicator is used by traders to confirm the market direction. When RSI above the 50 center mark as shown above it means prices a generally closing higher than where they open.
In the above example because RSI is above 50 center mark then the upwards trend is confirmed by the RSI. As long as the RSI is above 50 it means prices of gold will continue moving upwards.
A trader will use these two indicators to come up with trading rules for opening a trade. These trading rules will form what is known as a trading system.
The trading rules are:
Buy when both moving averages are moving upwards and RSI is above the 50 center mark as shown above.
How To Open Sell Trade
To open a sell trade like in the example below:
A trader would open a sell trade once both moving averages are moving downwards and RSI is below 50 center mark.
When RSI is below 50 it means prices are closing lower than where they open and therefore the gold price trend is downwards.
Once a trader knows how to determine which trade to place using the gold trading charts the next thing to learn is how to open a gold chart on the gold trading platform and how to open a new trade.
Opening a Gold Trading Chart
A trader can open a new trading chart from the file menu on their trading platform as shown below.
Placing Indicators on a Chart
A trader can also place chart indicators from the navigator menu on the trading platform. To go to the navigator menu that is shown below a trader can click the view menu at the top left corner of the trading platform next to the file menu and select navigator - short cut keyboard keys are pressing CTRL+N to show this navigator window.
A trader will also use this demo trading account to learn about the gold trading platform as shown below.
A trader can use the demo trading account to learn how to navigate the above platform and how to check their account balance as shown above.
This demo account will provide traders with a good method of learning about gold trading and the various tools used when trading gold. Traders can practice with this account without depositing money; the money used in this account is virtual. Traders can learn and practice with this account until such a time when they get enough knowledge to help them to start trading gold profitably and then after that they can open a live gold trading account and start trading with real money.