Day trading in gold trading

Day trading is holding positions for minutes to hours and closing everything before the session ends. Day traders on gold typically work on 5- to 15-minute charts within a bias set on the 1-hour and 4-hour, take one to a few trades per session, and target moves of $10 to $40. Because nothing is held overnight, swap is not paid and the weekend gap is not a risk; in exchange, the trader must be present during the active sessions.

How it applies to gold trading

Gold’s session structure suits day trading. The Asian range gives levels, the London open gives the first move, the New York data and open give the second, and the London close gives a pause. A day trader’s plan is usually built around one or two of those windows, with the ADR as a guide to how much range is left. Costs are moderate: a 30-cent spread on a $20 target is 1.5%, far better than a scalper’s ratio.

The main risks are the data releases, which can move more in a minute than the day’s plan expects, and the psychological pull to keep trading after the planned windows have passed.

A common mistake

Turning a day trade into a swing trade because it has not reached its target by the close. The original analysis was intraday; holding it overnight adds swap and gap risk the plan never priced.

See also: Scalping, Swing trading, ADR, Killzone.

Frequently asked questions