Trading Gold, Capturing the Moves Using an ATR Trailing Stop & Leaderboard Update

Stage two of the Trading Cup has seen a number of new traders hit the top ten leaderboard, which is great to see.

Gold continues to be the preferred trading instrument among the leaders, despite the volatility dropping off slightly over the last 5 days.

At the top we have Na Na Yu, who hits the top position for the first time since the Trading Cup started.

You can see the current snapshot of the leaderboard below.

What we also notice is the number of past contestants who continue to outperform their fellow traders, sticking to the top ten. It just goes to show how challenging it is to compete and win a spot in the final.

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What is the current leader, Na Na Yu, trading?

Sitting at the top of the leaderboard at 277.48% is Na Na Yu, who is focused exclusively on trading Gold.

What is interesting to note, is Mrs. Yu has only made two closed trades to achieve her outstanding result.

The first trade on Gold was a buy signal, going long at $1,796.35 as the market was sitting oversold, according to the stochastic indicator.

Mrs. Yu placed, what in hindsight, appeared to have been a solid risk:reward trading opportunity. Should she have been wrong, she could have taken the small loss and moved on to other opportunities.

What is interesting is how close to the top of the move she got, closing the position at $1,810.71. Mrs. Yu placed a take-profit at that level, locking in her first successful trade in the Trading Cup.

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You can then see her second trade, which was a short-sell from $1,808.97, as the market was seemingly caught at the top of the range, and overbought.

Having the patience to ride through a slight move against her, the Gold price then saw selling pressure all the way down to a low of $1,790.07.

Mrs. Yu managed to capture a huge portion of the move lower.

In fact, she managed to get 74.8% of the full move, which is incredible.

Traders often rate themselves in hindsight as to how much of the successful move they captured on any one position.

Do you cut your winning trades off too short and leave a heap of money on the table?

Nothing is worse than cutting off a winning trade, only to see it continue to move in your direction without you on it.

What technique traders use to rank the performance of individual trades is to work out what percentage of the total move they achieved.

It is near impossible to get 100% of a successful move. As you can see in the chart above on Gold on the 30 minute chart, to get 100% of the move requires selling at the very top and buying at the absolute low.

The only people who can do that are compulsive liars 😉

Instead, our goal is to get a portion of the successful trade. Anything above 60% is excellent when capturing a portion of the trend.

Are you using a trailing stop?

One way to capture the trend is to run a trailing stop once you enter the position either long or short. This will ensure you never get the full move but instead, give it maximum opportunity to capture more of the trending move and not get whipsawed out prematurely.

One of the best trailing stop methods is using a stop that is calculated based on the volatility of the instrument you are trading.

Many traders prefer to use an Average True Range (ATR) based stop loss.

An ATR based stop is great as it takes into account how much the instrument is trading.

For example, it would be silly to have a trailing stop of $1 on Gold (on the 30 minute chart shown below), when you can see the average move on a 30 minute candle is from $1.34 to $5.77.

If you stop is too tight, for example within 1 ATR, then your chances of getting stopped out prematurely, skyrocket.

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Instead, you are better off using a multiple of ATR in order to set your trailing stop.

Many traders like to use a trailing stop anywhere from 1.5ATR to 3ATR, depending on whether they are short-term traders or trend followers, trying to capture the big moves.

Have a play around with a few figures and see how much of a move higher or lower you can capture with the various types of trailing stops.

Are you ready to join the next Stage? Click here to register an account.​​

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Ashley Jessen // Author of CFDs Made Simple, Head of Marketing at ACY Securities

Ashley Jessen is the author of CFDs Made Simple and Head of Marketing at ACY Securities. He has been in the financial services industry since the year 2000 and worked for some of the leading companies in the CFD, Forex and Online Trading space.