Is Gold a Buy or Sell? A Detailed Shorting Strategy for Micro Gold Futures (MGC)

For those asking, “Is gold a buy or sell?”, this structured shorting plan focuses on the Micro Gold Futures (MGC) contract. This approach leverages selling the bounce at resistance levels while managing risk and securing incremental profits. With the MGC contract, each 0.1-point move is worth $1 per contract, making it a flexible choice for traders managing smaller positions.

Gold futures price at the time of writing

Gold futures price, or the micro, is nearing the 1st fill of the sell trade plan
Gold futures price is nearing the 1st fill of the sell plan

Key Details: Selling the Bounce in Micro Gold Futures

The logic behind this approach is rooted in an analysis of the volume profile and past VWAP levels, particularly from December 10 and December 11, where we see a cluster of such key levels. Additionally, the $2,700 round number adds psychological significance to these levels. By casting a net of sell orders at strategic points, we aim to scale into the position effectively.

Contract Specifications

  • Symbol: MGC (Micro Gold Futures)
  • Value per Tick: $1 per 0.1-point move for one contract
  • Value per Point: $10 per one contract

Sell the Bounce Entry Levels

To execute this strategy, place sell orders at:

  • $2,689.70 – 1 unit (16.67% of the position budget)

  • $2,694.70 – 2 units (33.33% of the position budget)

  • $2,701.50 – 3 units (50% of the position budget)

  • Weighted Average Entry Price: $2,697.27

Stop Loss and Take Profit Levels

  • Stop Loss: $2,705.36 (0.3% above the average entry price)
  • Take Profit (Partial Profits Along the Way):
    • $2,670.80
    • $2,651.30
    • $2,644.50
    • $2,625.70
    • $2,612.30 (final target, 3.2% below the average entry price)

Profit and Loss Calculations

For the Full Position (6 Contracts):

  1. Stop Loss Impact:

    • Stop Loss Level: $2,705.36
    • Difference from Weighted Entry Price ($2,697.27): $8.09 (81 ticks)
    • Loss per Tick: $1 per contract
    • Total Loss (6 Contracts):
      81×1×6=81 \times 1 \times 6 =81×1×6= $486.00

  2. Profit Impact at Final Target:

    • Take Profit Level: $2,612.30
    • Difference from Weighted Entry Price ($2,697.27): $84.96 (850 ticks)
    • Profit per Tick: $1 per contract
    • Total Profit (6 Contracts):
      850×1×6=850 \times 1 \times 6 =850×1×6= $5,100.00

  3. Partial Profit Levels:

    • $2,670.80:

      • Difference: $26.47 (265 ticks)
      • Profit per Contract: 265×1=265 \times 1 =265×1= $265.00
      • Total Profit (6 Contracts): 265×6=265 \times 6 =265×6= $1,590.00

    • $2,651.30:

      • Difference: $45.97 (460 ticks)
      • Profit per Contract: 460×1=460 \times 1 =460×1= $460.00
      • Total Profit (6 Contracts): 460×6=460 \times 6 =460×6= $2,760.00

    • $2,644.50:

      • Difference: $52.77 (528 ticks)
      • Profit per Contract: 528×1=528 \times 1 =528×1= $528.00
      • Total Profit (6 Contracts): 528×6=528 \times 6 =528×6= $3,168.00

    • $2,625.70:

      • Difference: $71.57 (716 ticks)
      • Profit per Contract: 716×1=716 \times 1 =716×1= $716.00
      • Total Profit (6 Contracts): 716×6=716 \times 6 =716×6= $4,296.00

    • $2,612.30 (Final Target):

      • Total Profit: $5,100.00 (calculated earlier).

Why Selling Gold at Resistance Works

  1. Capitalize on the Bounce: This strategy leverages retracements into resistance levels for short entries.
  2. Manage Risk: With a tight stop loss and multiple take profit levels, traders minimize downside while maximizing gains.
  3. Structured Approach: By scaling into the position, traders reduce the risk of mistiming the market.
  4. Answering 'Is Gold a Buy or Sell?': For those considering selling gold, this plan provides clear, actionable guidance.

Trading Guidance for Micro Gold Futures

  • Execution: Place sell orders at the specified levels, and stick to the stop loss and take profit plan.
  • Partial Profits: Lock in profits at key levels ($2,670.80, $2,651.30, $2,644.50, $2,625.70, and $2,612.30).
  • Risk Management: Adjust position sizes and levels to match your risk tolerance and market conditions.

Is Gold a Buy or Sell? Key Takeaway

This shorting strategy for micro gold futures (MGC) leans toward selling gold, with a clear plan for entering, exiting, and managing risk. By focusing on resistance levels, partial profit-taking, and disciplined stops, traders can confidently answer, “Is gold a buy or sell?” with actionable insights.

This strategy serves as an orientation and should be adjusted to fit each trader's needs and personality. For example, if the short gold trade begins moving in their favor, some traders may choose to adjust their stop loss, moving it to the entry price to reduce risk.

Trade at your own risk and adjust the position size as necessary. Orders might not get filled. Always do your own research. This is for educational purposes only. Visit ForexLive.com for additional views.