Mistake #5 – Thinking local instead of global

Gold is a global commodity – keep an eye on the big picture.

It is natural to look to the things you are familiar with when you are doing your analysis. For some investors, this means reading domestic news and weighing that within their price forecasts for gold. The problem is that the marketplace is global. One must be as aware of international news and economic forces that might play or weigh on the price of precious metals. Sure, gold is priced in
US dollars – but shifting concerns in the Euro zone or China are just as likely to move prices dramatically and bring market volatility.

Don’t forget to take into consideration the activities that can be happening within the investment realm. There are plenty of motivating factors for gold price trends that might not make headlines on the morning business broadcasts. Algorithmic trading programs have been rumored to take into consideration the typical risk perspective of smaller traders and to use that in an effort to push prices into levels where sizable stops are likely housed. Whether true or not it, in some markets there are indeed areas where
the likelihood of stop orders increases. By knowing the standard deviation in your market and using technical analysis, you can learn to better identify such areas and learn to avoid being part of the herd. Educate yourself to strategically place your stops at a level that is less apt to get triggered along with the masses. It takes patience and practice, but if you wish to avoid being knocked out of a position prematurely you ought to consider improving the placement of your stop orders. Computers can help you see the bigger picture.

Discovering the regularities and nuances in each market is difficult, and requires constant vigilance and study. Markets are dynamic, ever-changing, and adapting. You should be just as willing to consistently devote the time, effort, and energy necessary to be a student of your market. Learn to step back and see the big picture for gold.