This past week there were again no swing trades and 2 news trades. The Euro trade was a non-starter, but the US GDP had quite a move on the XAU/USD pair. Lets take a look at this.
First of all you need to divide the the spread and move by 10 to get an accurate portrayal of the financial value of the pips using XAU. If you were trading 1 lot, a 1 pip move on the EUR/USD is $10 but on the XAU/USD it is only $1. But in both cases it is still 1 pip.
So a spread of 60 from a financial perspective on the XAU/USD is really the equivalent to a spread of 6 on other USD pairs. We need to account for this in spread and stop loss settings when trading gold.
I tried 4 stations using 3 different brokers (two stations were on the same broker) for the US Advance GDP q/q today. I tried buy/sellPips of 8, 12, 20, and 22 on the 4 stations. The spreads were 42, 66, 70, and 91.
The deviation was a relatively small .3. The spike on the XAU/USD pairs was in the neighborhood of 140.
The EA on the station with 91 didn’t enter my trades due to the spread.
On the station where the buy/sellPips were 8, the EA tried to enter the orders but they failed on an Invalid Stop error. This was because the stop loss was inside the spread. The stop loss settings on XAU/USD need to be increased.
On the station with buy/sellPips at 22 (worst spread was 66), the orders entered, the sell went live with slippage of 141, and immediately went out since the spread increased right at that instant and my fill price was right at the current price due to the slippage.
On the last station, with buy/sellPips at 20 (worst spread was 70), the orders entered, the sell went live with slippage of zero, and the order was instantly up 15 pips. The XAU/USD pushed down nicely a total of about 40 pips before I closed a minute later.
It looks like XAU/USD is the way to go for US trades. A week from today we will have the US NFP, which should cause a huge move. We should continue to experiment with this to see if we can get back into some good profits and figure this gold thing out. It looks like different brokers have vastly different slippage on the orders. Need to find ones with huge liquidity and zero slippage.
For next week the trades I will post are:
Tue 9:30 PM – AUD CPI q/q
Wed 8:30 AM – CAD GDP
Wed 2:00 PM – US Federal Funds Rate
Thu 7:00 AM – UK Official Bank Rate
Fri 8:30 AM – US Non-Farm Employment Change
That’s it. Have a great weekend.