50 Period Moving Average Strategy
A gold trader can choose a moving average to trade with based on the xauusd chart time frame that they use for trading; a gold trader might choose the moving average to trade 1 min chart, 1H gold chart, 4H gold chart, daily chart or even weekly xauusd trading chart.
A gold trader can also choose to average the closing xauusd price, opening xauusd price or median xauusd price - when choosing a gold moving average indicator.
Moving average gold indicator is oftenly used to measure strength of gold trends. Data of the moving average is precise & its output as a line can be customized to the preferences of a gold trader.
Using the moving average gold indicator is one of the basic gold strategies to generate buy & sell signals which are used to trade in the direction of the trend, since the moving average indicator is a lagging indicator and a gold trend following indicator. The Moving average xauusd indicator as a lagging gold indicator means that moving average will tend to give late gold signals as opposed to leading gold indicators. However, the Moving average indicator as a lagging gold indicator gives more accurate gold signals and is less prone to gold whipsaws compared to gold leading indicators.
Traders select the moving average period to use when trading with this moving average gold indicator depending on the type of gold trading method they use: short term, medium term and long term.
- Short term gold trading: 20 Period Moving Average Strategy
- Medium term gold trading: 50 Period Moving Average Strategy
- Long term gold trading: 100 Period Moving Average Strategy
The period of the gold moving average in can be measured in 1 min chart, 1H gold chart, 4H gold chart, daily chart or even weekly gold chart. For our gold trading strategy example we will use 1H gold chart period.
Short term moving averages are sensitive to xauusd price action and can identify gold trend signals faster than the long term moving averages. Shorter term moving averages are also more prone to gold trading whipsaws compared to long term moving averages.
Long term moving averages help to avoid gold whipsaws, but are slower in identifying new gold trends and gold reversals.
Because long term moving averages calculate the average using more xauusd price data points, the long term moving average does not reverse as fast as a short term moving average and it is slow to catch the changes or reversals in the xauusd trend. However the longer term gold moving average is better when the gold trend stays in force for a longer time.
The task of a gold trader is to find a moving average period that will identify gold trends as early as possible while at the same time avoiding fake out signals - gold whipsaws. As a trader you will need to first test different gold moving average periods before deciding which gold moving average period is best suited for your style method based on the results of the testing that you'll do using different moving averages.
XAUUSD Moving Average Strategy
Moving average gold indicator is a trend following gold indicator that is used by traders for three things:
- Identifying the beginning of a new gold trend
- Measure the sustainability of the new gold trend
- Identify the end of a gold trend & signal a gold trend reversal
The moving average gold indicator is used to smooth out the volatility of xauusd price action. The moving average indicator is an overlay indicator and it is superimposed on the xauusd price chart.
On the moving average gold example illustrated and explained below - the blue line represents a 20 period moving average, which acts to smooth out the volatility of the xauusd price action.
20 Period Moving Average Strategy - 100 Period Moving Average Strategy
Calculation of the Moving Average XAUUSD Price Period
The moving average is calculated as an average of xauusd price using the most recent xauusd price data point - gold periods.
If a moving average uses the 20 period to calculate the moving average then it is referred to as a 20 period moving average, because most gold traders use the daily chart as the standard xauusd price period we shall just refer to the moving average as the 20 day moving average.
To calculate the 20 day moving average the xauusd price of the last 20 days is averaged - and the average is then updated constantly after every new xauusd price period closes. So after every new xauusd price period close is formed the average is then re-calculated afresh using the most recent 20 xauusd price periods, that is why this gold indicator is called a moving average because the average is constantly moving when price data is updated and re-calculated.
