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Using Technical Analysis For Gold and Silver Trading

While it is a fact that gold and silver trading involves a lot of risk, you may wonder why so many are continuously gaining success in dealing with these commodities. There are traders who always seem to know the exact time to grab the trends especially for highly trending commodities like gold and silver. One of the reasons many fail in this type of trade is because they neglect the significance of examining market history, market condition as well as price movement. However, tools like technical analysis is valuable in this type of trade since it has the capability to spot which trend or direction will go on in the future.

Technical analysis involves the procedure of assessing securities by studying the statistics produced by market activities such as previous prices and volume. It provides charts and other tools that can help identify patterns on possible future activity.

This tool includes three basic assumptions namely “price moves in trends”, “history repeats itself” and the “market discounts everything”.

The assumption, price moves in trends explains that after a trend has been established, the future movement of price has a higher chance of going into the same direction of trend rather than the contradictory.

The assumption, history repeats itself is commonly used when examining the movement of price. Price movement has a behavior that is accredited to market psychology. This further explains that active market participants have most likely to produce a constant reaction to the stimuli in the market that will eventually be similar. This assumption utilizes the patterns in the charts to understand the trends as well as study market movements. Since patterns tend to repeat, the charts are considered useful even after a century.

It is inaccurate to assume that technical analysis does not consider a company’s fundamental factor significant. In fact, it trusts that, at any given time, the stock price replicates all that could or has affected the company, which includes fundamental factors. It considers factors such as “wider economic factor”, “market psychology” as well as “company’s fundamentals” as priced into a stock, so there is no reason to assume that this tool looks at these factors separately. This tool perceives the movement of price as an output of the supply and demand of a certain market stock.

There are three highly effective technical analysis strategies for gold and silver trading that Derivative Trading Systems is currently teaching. DTS teaches about the 8 winning trading strategies for these commodities, the factors that influence the price of gold and silver, the different ways to trade these commodities as well as this type of trade’s background. All this information is included in DTS’s free e-book for users to download.