Position trading in gold trading

Position trading is the longest-horizon active style, holding for weeks to many months to capture a major trend. Position traders work from weekly and daily charts, size small, place wide stops and are guided as much by macro drivers (real yields, the dollar, central bank buying) as by technicals. Entries are often added to over time rather than taken all at once.

How it applies to gold trading

Gold’s multi-year trends make position trading attractive in principle, but the instrument matters. On a leveraged spot contract, swap accumulates every night: at a hypothetical −$25 per lot per night, a 0.10-lot position held for six months pays roughly $450, which must be subtracted from any gain. Futures contracts carry the cost in the price (contango) and must be rolled; ETFs charge an annual fee; physical gold has premiums and storage. Position traders choose the vehicle by comparing those costs over the intended holding period.

Stops are wide, often $150 or more from a weekly chart, so position size is small relative to the account, and the trade is reviewed at weekly closes rather than daily.

The gold price history pages on this site give the long-run context position traders need, including every year’s close and the major bull and bear phases since 1970.

A common mistake

Running a position trade on a leveraged spot account with a swap cost that exceeds the realistic expected move. The thesis can be right and the trade still lose.

See also: Swing trading, Swap and rollover, Contango, Gold ETF.

Frequently asked questions