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The Gold Dumper strategy

Description

Market effects, sometimes called seasonal effects, are recurring patterns in the markets. Some patterns develop over days, some patterns occur during the day. The Gold Dumper strategy is used by the German trader, Holger Breuer.

Holger Breuer discovered an intraday pattern in the gold price. According to this trader the gold price has a tendency to weaken during the morning. The Gold Dumper trading strategy is designed to profit from this perceived, repetitive weakness.

Suitable for : Gold
Instruments : Futures and CFDs
Trading type : Daytrading
Trading tempo : 2-3 signals per week
Using NanoTrader Full : Manual or (semi-)automatic
 

The strategy in detail

The strategy is based on weakness in the gold price. The Gold Dumper therefore only opens short sell positions. Because the strategy only looking opens short sell positions it is a good candidate to complement a portfolio or to complement other strategies, which tend to focus on buying positions.

In this German language article written by trader Holger Breuer, he describes his strategy in detail.

When to open a position?

For a valid short sell signal to occur, the Gold Dumper trading strategy has these conditions:

  1. Only the gold price from 8h00 to 22h00 is relevant. The price outside these hours is not taken into account.
  2. A short sell signal occurs at 8h00, if the gold price is below the 5-day moving average price.
  3. A position is either opened at 8h00 or not at all.

This example shows a signal. The bleu line is the 5-day moving average. The gold price at 8h00 is below this average, which colours the chart background red. The trader opens a short sell position.

The Gold Dumper strategy

When to close a position?

A position is closed, when either of these three events occur:

  1. The profit target of 0,5 percent is reached.
  2. The stop loss is of 1,0 percent is reached.
  3. The time stop of 15h45 is reached.

This example shows a Gold Dumper position, which reached the profit target (green line) after two hours. The stop loss (red line) did not come into play.

The Gold Dumper strategy

This example shows a Gold Dumper position, which is closed by the time stop at 15h45.

The Gold Dumper strategy

In his article the author states the strategy works better on some days than others. Traders are encouraged to filter signals based on what day it is. The strategy in the NanoTrader platform already contains a day filter. Users can simply switch days on or off to accept or reject signals.

Practical implementation

Using the NanoTrader Full follow these steps:

  • Open the Gold chart.
  • Select the template study "WHS Gold Dumper” in the "WHS Strategies" folder.
  • To trade semi-automatically, activate TradeGuard+AutoOrder in the chart. To trade automatically, activate AutoOrder in the chart.