If you are a scalper or a day trader, then you know the daily grind. It’s not easy to analyze all the currency pairs of forex with high accuracy. When you analyze more currency pairs, the chances of a failed analysis increase. Also, analyzing so many pairs can cause us to make bad trading decisions. So, I fixed this issue by focusing on a single financial asset and found XAU/USD to be the best financial asset of all.
I found several advantages of trading only gold over other currency pairs or indices.
I also highly recommend that you read these advantages and focus on only one financial asset so you can keep all your attention on a single asset instead of many.
1. Clean Price Action Without Gaps
In trading, we always focus on finding a good trending environment so we can trade easily because, in choppy markets, we will mostly lose. This environment is easy to find on higher timeframes, but when it comes to lower timeframes, it becomes difficult to find a smooth and clean price action environment. This is because on lower timeframes, such as 1 minute or 30 seconds, you will see candlesticks forming with larger gaps, making it difficult to find high-probability zones and exact stop-loss levels.
But this is not the case with XAU/USD. When you open a Gold candlestick chart, even on a 15-second timeframe, you will see clear and neat price action patterns. There are no gaps within the candlesticks. The Gold chart on a 15-second timeframe will be the same as on a 4-hour timeframe.
So, it is a good choice to choose gold for trading.
2. Ultra-Low Spread in Lower Timeframes
One of the best features of gold trading is that most brokers offer an ultra-low spread and even zero spread.
So, it’s easy to do scalping on lower timeframes.
This is not possible with other forex currency pairs or other financial assets, except for a few such as EUR/USD and GBP/USD.
So, when we are scalping, a stable low spread is a must, which many brokers offer for the XAU/USD commodity. This is another factor for choosing gold trading over other currencies.
3. Easy to Place a Tight Stop-Loss
In gold trading, a small candlestick movement can represent a movement of several hundred pips, while in other forex currency pairs, the pip movement is slower and smaller. So, on lower timeframes, the number of pips is not an issue. For example, in EUR/USD, an inside bar candlestick might contain only five pips, while the same candlestick pattern in gold could include 50 pips.
So, when we calculate the lot size, it will need to increase drastically in EUR/USD, and some brokers may not offer enough leverage. However, this is not an issue with gold.
This is another factor why I prefer gold over other financial assets.
4. Trading Only a Single Financial Asset
One of the best trading strategies is to trade only a single financial asset. For example, in forex, we have to care about a number of currencies, such as GBP, USD, JPY, and CHF. It becomes complex to manage and handle.
But with gold, the primary drivers are the USD and other global factors. So, it’s easier to handle and manage only gold instead of making things complex by trading a number of currencies.
Conclusion
I highly recommend that you choose gold and only trade it. This will help you manage many psychological factors and keep the mess away.
It’s easier to analyze a single financial asset and continue analyzing it daily. This way, we can more easily track its trend, such as noting that it was in a downtrend yesterday and is in a bullish trend today.
Also, remember that price action works the same way on each timeframe. A price action pattern that works on a higher timeframe will also work the same way on a lower timeframe. It’s a misconception that the winning ratio of price action patterns on lower timeframes is lower.
I hope you will take some notes from this helpful post.
If you have any questions, don’t forget to comment below.
