I don’t know if this is the right place to ask, but:
I wanted to follow the gold/USD-price, so I decided to bring up the chart for that. When I did, I noticed that it moves thousands of pips in what (visually/length wise) would only be 100 or something, on a normal currency chart.
I figured I was missing something - so I decided to do a test trade (I don’t even have a real account, anyway, but I’m hesistant to even risk my fake money at this point of my learning). The attached image shows you the trade. It made 1023 pips between 1:16 and 13:24 on the 27’th of January 2014. Don’t worry about the money amount, or how much risk I took, it’s a stupid amount of fake money anyway, as I said.
I have a few questions.
Is this some sort of ETF, or how does this work?
Would it be classified as currency trading, or is it in another category?
Why does it move so much, and is there a catch to it (other than the ~48 pip spread, which doesn’t really matter anyway)?
same deal its just your risk is $1 per cent rather than per pip. The volatility of gold is relatively high compared with currencies but its similar to trading GBPJPY vs EURUSD. You should make an expected vol adjustment in your risk. Your trade you made about $10 which in cents is 1000 thus you get your $1000 pnl as 1$ a cent.
The values threw me off, I guess. It looks like hundreds of pips, but if it’s cents and not pips… hmm. I think I get it.
I need to make a more controlled risk trade to see how it turns out. Risk was controlled, but then I adjusted the stop and the stop (and limit) since it needed what I thought were hundreds of pips of a stoploss above that shooting star.
It should simplify things thinking in this way. The bonus also is that the indcies and futures trade this way also so its only really forex that is weird.
