Dear trader friends, for those of you who have long been involved in the world of online gold investment (gold trading), you are certainly familiar with the term panic selling.
As a brief reminder, panic selling is a condition in which prices drop drastically in a very short time. This happens because traders or investors open a large number of positions simultaneously, forcing prices to fall beyond reasonable levels.
On this occasion, I will share an easy way to deal with panic selling and help you predict the right moment to open a buy position shortly after panic selling occurs. Let’s take a look.
Before going any further, you need to know that panic selling can be divided into four types, as follows:
1. Phoney Panics
Gold investors (both online and offline) receive rumors from unreliable sources, and the news itself is questionable.
However, because traders or investors worry about their funds, they carry out massive sell-offs. Some of them even react solely to rumors without seeking clarity or confirmation from credible sources.
2. Contagious Panics
This type of panic selling is mainly caused by paranoia that haunts gold investors or traders. This fear drives them to sell massively because they worry there will be no positions left to sell the next day.
Such panic is usually triggered by a financial crisis in another country. Investors or traders fear that the crisis will spread to Indonesia.
3. End of Cycling Panics
In this situation, prices are already too high, and investors or traders feel left behind, prompting them to sell massively. They try to protect themselves by selling their assets because they fear the assets will lose value entirely if they do not sell immediately.
4. Real Panics
In my opinion, real panics are a type of panic that can be reasonably accepted. This panic occurs because there is a real threat to investors’ assets. For example, during Greece’s financial crisis, investors and traders rushed to sell their positions because prices were indeed expected to fall sharply.
After understanding the four types of panic selling, here are some tips you can apply when panic selling occurs. You can also choose several indicators that are considered capable of confirming trends based on your trading preferences.
Rules to Follow:
The initial price must drop rapidly with very high volume.
Volume will spike suddenly, form a new low, and then reverse to create an opposite trend. Look for engulfing candlestick patterns.
When higher low price waves begin to appear, this is a signal to open a buy position.
Sideways movement will be visible around the trendline.
Price must be able to break through the MA 40/50.
You can use moving averages by connecting the lowest and highest points.
Conclusion
Panic selling actually has its advantages. One of them is that online gold investors (gold traders) have the opportunity to open positions with larger lot sizes. If you understand the opportunity and can apply the steps above, you can gain profits after the panic selling phase ends.
Before applying these strategies on a real account, try them first on a demo account.
Next, open a real account and turn your virtual profits from the demo account into real profits from online gold investment (gold trading) right now.
Good luck and happy trading
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