Trade Management Principles

Trade management involves a few key methods to help minimize risk and secure profits. One strategy is to take partial profits at logical points. Another important step is to move stop-loss orders to the entry point after hitting the second profit target. This method focuses on protecting profits and reducing exposure, rather than chasing the market. TradeCompass’s approach, used by investingLive.com, encourages trading discipline and clarity without giving financial advice. Traders need to keep an eye on their risk and capital, making independent trades that align with their risk tolerance. Currently, gold futures are around 3384.6. Our immediate direction is influenced by the 3388.9 level. As long as we are below this level, we expect prices to go down. The first targets to watch are at 3383.1 and the value marker from yesterday at 3377.4. This short-term decline should be viewed as a part of a larger rally, with gold still up over 28% since the start of 2025. The current dip seems like a healthy pause after such a big rise, indicating that the market is taking a break rather than reversing its trend.

Impact of Economic Indicators

The recent pullback is linked to last week’s US CPI data, which showed inflation at 3.1%, slightly below the 3.3% that economists expected. This eased inflation worries and caused the dollar to strengthen temporarily, which affected gold prices. Additionally, comments from the central bank last month suggested that rate cuts may not happen as soon as the market anticipated. For traders in derivatives, this situation offers multiple opportunities in the upcoming weeks. Bears might consider short dated puts targeting the 3350 level, while bulls might see this as a chance to sell puts at lower levels, like 3320, to earn premiums during this dip. If prices break above 3394.5, it would change the current bearish outlook and indicate that the consolidation phase has ended. We’ve observed similar patterns in the past, especially during the surge we saw in 2020. Sharp rallies were often followed by brief pullbacks that served as buy opportunities for those who had a longer-term positive outlook. This historical pattern suggests that being patient could pay off once this selling pressure eases. Therefore, we need to stick to our strategy and treat the 3394.5 level as a crucial pivot point. Until we reclaim that level, we should adhere to the short-term bearish trend and manage our risk appropriately. A rise above it would indicate that bulls are back in charge and the larger upward trend could continue. Create your live VT Markets account and start trading now.

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