Previous Research in XAU/USD Trading

Kermanshahi, S. investigated "Straining the Influence of Technical Analysis for Predicting the Market Movement and Future Cost in the FOREX Demand." The result proved that technical analysis is effective in the Foreign Exchange (FOREX) market. One of the essential qualities of the FOREX market is that it is high in volatility, thus meaning that it tends to fluctuate dramatically and that traders can make money and lose money quickly. It is essential to observe the currency pair's past prices using technical analysis to predict the future movement of the costs. These signals will become a determinant to entering a position in the FOREX market. The study observes the strength of technical analysis in one month, starting November 2013. Four of the most traded currency pairs are selected from the FOREX market, which includes EUR/USD, AUD/USD, GBP/USD, and USD/JPY. Each profit or loss result will be categorized based on its floating time, which is the difference between the opening and closing times. It is concluded in the study that the most profitable positions are in the hourly category. This results from the lower chances of volatility and dramatic movements of the parts. The researchers also concluded that implementing the technical analysis would alleviate the risk of losses in the FOREX market.

Previous Research in XAU/USD Trading

Majercakova and Gregus performed research with the title "The Creation of the Convenient Investment Strategy in FOREX." The study aimed to create the most suitable investment strategy with the analysis of the Foreign Exchange (FOREX) market. The researcher uses both technical and fundamental analysis to be implemented in actual trading activity. Ten positions were entered, 7 out of 10 resulted in a profit, and 3 out of 10 resulted in losses. The researchers found that technical analysis is a reliable technique for trading as it is based on facts and not assumptions.

Alwiyah and Liyanto researched "Analisis Teknikal untuk Mendapatkan Profit Dalam FOREX Trading Online" to find good stability in predicting the GBP/USD and EUR/USD currency movement pair prices. The study is based on technical analysis using three technical indicators:

• The candle stick chart
• Moving Average Convergence Divergence (MACD)
• Stochastic Oscillator for within-the-day (intraday) trading and an hourly timeframe

These technical indicators will be the key determinants in deciding whether to make buy or sell a position in the Foreign Exchange (FOREX) market. The trading process was conducted using virtual money, and the result showed a 60% profit using the technical analysis. However, the experiment indicated inconsistent gain, and the researchers suggested that more technical indicators, such as the Bollinger bands (BB), can be used. Thus, further research can be conducted by modifying and adding more indicators that suit the trading style.

Theoretical Framework

The dependent variable, known as the criterion variable in this research, is the profitability obtained from trading XAU/USD (Gold vs. US Dollar) in the Foreign Exchange (FOREX) market, whether it will result in a profit or loss. The independent variable, also known as the predictor variable in this study, is the movement of prices of XAU/USD in the Foreign Exchange (FOREX) market. Thus, the independent variable will influence the dependent variable. In this case, the movement of prices of XAU/USD will affect the profitability, whether it will result in profit or loss. In this study, the XAU/USD price activity will be observed using the candlestick chart, along with three other technical indicators: the Bollinger Bands (BB), Rolling Average Convergence Split, and the Relative Strength Index (RSI). These technical indicators are supported using the Trading View Application, a software consisting of many well-known charts and technical analyses that can be used to locate trends and opportunities in the global markets. Furthermore, the Meta Trader 4 and Meta Trader 5 platform will be used to enter a position in the market, whether to make a buying or selling work.

Managerial Implications

Despite the limitations, there are several implications in XAU/USD trading. Firstly, researchers have chosen the Bollinger Bands, MACD, and RSI indicators as the strategy for trading XAU/USD. The observation uses the 5-minute time frame with a specific stop loss and takes profit to investigate the strength of the technical analysis. Thus, opportunities arise for future investors to analyze other specialized tools and indicators, along with modifying different timeframes to determine the most reliable

strategy for obtaining maximum profitability. In addition, it is also essential to have a money management strategy to control the risks of losing money. One of the actions that could solve this problem is setting the stop loss and take profit.

Important Notes

The effort to find the best method of analysis for obtaining maximum profitability in FOREX trading is almost impossible. The most practical option for the traders is to depend on the time frame and access to more information. The different strategies might apply to foreign currency pairs, depending on the fluctuation level, and many others.

There will be a possibility of false and false signals with the indicators utilized. It is noted that no one, not even professional traders, can consistently predict the future market correctly without any mistakes and will always be correct in predicting future prices and the movement of the foreign exchange market.

Since the Foreign Exchange (FOREX) market is open 24 hours a day except for the weekends, it can be not easy to constantly keep monitoring the price movements to find the suitable time for entering a position in the market, much less with all the technical indicators offering the same signals. The trader may have missed an opportunity to join a situation that could have resulted in a profit.

Conclusion

Trading gold is much like trading forex if you operate a spread-betting podium. A gold trading procedure can contain a mix of fundamental, sentimental, or technical analysis. Refined gold traders acknowledge that the yellow metal is priced in US Dollars and will account for its trend in their gold investigation.

Once upon a time, trading gold was problematic: you had to purchase and sell the metal. Then came futures and choices, allowing traders to take appointments without finishing up with a safe full of bars, coins, or jewelry. Gold ETFs assembled it more comfortably still; trading gold was much like dealing inventory.