Monday, April 7, 2014

The Odds Are In Your Favor To Trade Gold This Quarter

Using MarketClub's weekly and daily Trade Triangles, I have found that over the last 6 1/2 years, the second quarter of the year has shown the most consistent profits in gold. These past results showed a quarterly gain on average of $7,104.83 on one futures contract.

Gold (XAUUSDO) enjoyed a nice move up earlier in the year, reaching a high of $1393.35 and has pulled back to an important Fibonacci support area. I want to watch this market very carefully and wait for the weekly Trade Triangle to turn green to get bullish on gold. That's not to say I am not longer term bullish, it only means that my timing will kick in when the weekly Trade Triangle turns into a green Trade Triangle.

Besides the Fibonacci support area, the RSI indicator is also at a very low level, similar to that of December 2013.

Trading Results

Q2 of 2008            $965.00
Q2 of 2009            $870.00
Q2 of 2010         $7,057.00
Q2 of 2011         $6,700.00
Q2 of 2012         $4,223.00
Q2 of 2013       $31,260.00
TOTAL             $42,629.00
AVE GAIN         $7,104.83

The results are based on signals using MarketClub's real time spot gold prices and margin of $8,333. This particular trading strategy and results are based on trading one futures contract, both from the long and short side. An ETF could be substituted, but I suspect the results would be quite different.

Trading Rules

How to use MarketClub's Trade Triangles to trade gold:

Use the weekly Trade Triangle to determine the major trend and initial positions. Use the daily Trade Triangles for timing purposes.

Gold entry and exit signals are generated from the spot Gold (XAUUSDO) chart.

Let me give you an example: if the last weekly Trade Triangle is GREEN, this indicates that the major trend is up for that market. You would use the initial GREEN weekly Trade Triangle as an entry point. You would then use the next RED daily Trade Triangle as an exit point. You would only reenter a long position if and when a GREEN daily Trade Triangle kicked in.

You would then use the next RED daily Trade Triangle as an exit point, provided that the GREEN weekly Trade Triangle is still in place and the trend is positive for that market. The reverse is true when you have a RED weekly Trade Triangle. You would use the initial RED weekly Trade Triangle as an entry point for a short position. You would then use the next GREEN daily Trade Triangle as an exit point.

Only Trade With Risk Capital

Even if the odds are in your favor, don't forget that there are no guarantees in trading and only funds that you can afford to lose should be used to trade with.

See you in the markets!
Adam Hewison

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