XAUUSD EA Development: Handling Gold's Unique Market Psychology - Need Advice

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Hi MQL5 Community,

I'm working on an EA specifically for XAUUSD and running into some interesting challenges that I'd like to discuss with fellow developers.

The Technical Challenge: Gold's behavior differs significantly from major currency pairs. While EUR/USD responds predictably to technical levels, XAUUSD seems to be driven more by psychological factors and news events. I'm trying to code these psychological patterns into my EA logic.

Current Observations (August 2025):

  • Gold is consolidating between 3,350-3,380 range
  • Volume patterns suggest institutional accumulation
  • Fed rate cut expectations creating unusual volatility patterns

My EA Development Questions:

  1. Risk Management: How do you handle XAUUSD's sudden volatility spikes in your EAs? Standard forex risk management seems insufficient.
  2. Psychological Levels: Has anyone successfully coded "round number psychology" (like $3,400, $3,500) into their algorithms? What approach worked?
  3. News Filter: How do you handle Fed-related news events? Suspend trading or adapt position sizing?

mql5

// Psychological level detection 
double psychLevel = NormalizeDouble(MathRound(currentPrice/100)*100, 2);
double distanceFromPsychLevel = MathAbs(currentPrice - psychLevel);
if(distanceFromPsychLevel < 10) // Within 10 points of round number
{
   // Reduce position size or increase SL distance
   lotSize = lotSize * 0.5;
}

My Systematic Approach: Instead of fighting gold's emotional swings, I'm trying to embrace them. The EA waits for psychological exhaustion points (oversold/overbought combined with round number proximity) before entering.

Looking for:

  • Experience with XAUUSD-specific EA development
  • Risk management techniques for highly volatile assets
  • Psychological level integration methods

Has anyone solved similar challenges? Would appreciate any insights from the community.

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Alexis Napoli:
Gold's behavior differs significantly from major currency pairs. While EUR/USD responds predictably to technical levels, XAUUSD seems to be driven more by psychological factors and news events.

If you have a strategy that reliably predicts EURUSD, then maybe just trade EURUSD. Gold is actually a commodity as opposed to a currency pair. XAUSD is a CFD that mimics, for the most part, exchange-based spot Gold without connecting to it.

Alexis Napoli:
I'm trying to code these psychological patterns into my EA logic.

Forum on trading, automated trading systems and testing trading strategies

EA that recognizes round numbers and support/resistance levels from indicators

Zee Zhou Ma, 2019.01.24 04:10

There are 3 ways to do it:

1) The indicator has to generate display objects for the levels, then your EA has to extract the prices off these levels using double price = ObjectGetDouble(ChartID(),<Level>,OBJPROP_PRICE);

2) Or the indicator has to generate global variables for the levels, then your EA just needs to read from the global variables.

3) Don't use any indicator at all. Just code the logic of your levels into your EA. This way is the best. 

Here you go: https://www.mql5.com/en/docs/convert/normalizedouble

Alexis Napoli:
How do you handle XAUUSD's sudden volatility spikes in your EAs? Standard forex risk management seems insufficient.

I use a fixed stop sent with (or immediately after) my initial order, coupled with a conditional dynamic stop (indicator-based). The fixed stop sits on the trade server as a max loss per trade safety, and dynamic stop chases price to capture runners.

Alexis Napoli:
Fed-related news events? Suspend trading or adapt position sizing?

You could go semi-automated but this injects the biggest unkown variable into your strategy--a human. Good logic in a fully automated EA can automatically keep you flat when there is no clear mid-term price momentum and wild short-term volatality. There are loads of free momentum based indicators out there.

 
Ryan L Johnson #:

If you have a strategy that reliably predicts EURUSD, then maybe just trade EURUSD. Gold is actually a commodity as opposed to a currency pair. XAUSD is a CFD that mimics, for the most part, exchange-based spot Gold without connecting to it.

I use a fixed stop sent with (or immediately after) my initial order, coupled with a conditional dynamic stop (indicator-based). The fixed stop sits on the trade server as a max loss per trade safety, and dynamic stop chases price to capture runners.

You could go semi-automated but this injects the biggest unkown variable into your strategy--a human. Good logic in a fully automated EA can automatically keep you flat when there is no clear mid-term price momentum and wild short-term volatality. There are loads of free momentum based indicators out there.

Hi Ryan,

Excellent approach! That dual-layer system is exactly what XAUUSD needs - I really appreciate you sharing your methodology.

Your fixed stop + dynamic trailing concept makes perfect sense. The server-side fixed stop as ultimate protection while letting the dynamic stop handle the profit optimization - smart risk management.

Follow-up questions on your setup:

  1. Fixed stop calibration: How do you determine the initial distance for XAUUSD vs regular forex pairs? I've been struggling with this - too tight and you get stopped out by noise, too wide and you risk too much capital.
  2. Your indicator-based dynamic stop: What type of indicators work best for you with gold? I've found that traditional MAs get whipsawed during XAUUSD's choppy phases, but I'm curious about your experience.
  3. Timing question: Do you notice significant differences in how this system performs across different trading sessions? Gold seems to behave quite differently during Asian consolidation vs NY breakouts.

My current challenge: Balancing protection against those sudden $30-40 spikes (especially around Fed news) while not getting shaken out of good trends. Your dual approach might be exactly what I need to implement.

Have you backtested this extensively on XAUUSD historical data? I'd be particularly interested in how it handled those major volatility events like the March 2020 gold spike or recent Fed-induced moves.

Thanks for the insights - this is the kind of practical wisdom that makes this forum valuable!

Best regards, SwissTrader28

 
Alexis Napoli #:
Thanks for the insights

You're welcome, Alexis.

As we continue in this thread, I just want to be clear... I am prohibited from posting my backtest and live trading results because those are deemed "self-promotion" in this Forum. I appreciate that you haven't requested the full details of my business's proprietary strategy however, I will share the general process of how I arrived at it as I have done before. Frankly, I can't describe the stops without doing so.

Alexis Napoli #:
How do you determine the initial distance for XAUUSD vs regular forex pairs? I've been struggling with this - too tight and you get stopped out by noise, too wide and you risk too much capital.

Many traders will use something like ATR to measure recent volatility to, in turn, determine their dynamic stops. If we examine the code of an ATR indicator, we see that ATR is basically averaging the respective sizes of recent price bars on a traditional time based chart, e.g., M15, H1, etc. I find that the problem with this is that the size of each time based bar is quite random in relation to all other bars on the chart. What we end up with is a dynamic stop fed by a sample randomly sized bars that is only moderately useful. My solution is to forget about ATR, ditch the time based chart, and restructure all of the price data.

Although I have used range bars extensively in the past, I eventually settled on Renko bricks as a superior chart structure. I basically said to myself, why smooth out most of the noise with range bars when I can smooth out all of the noise with Renko bricks? The effect is that multiple flat/short time based bars will be "contained" in one brick, and no new bricks will print as is appropriate. In contrast, large time based bars will distributed across multiple bricks--providing more granular entries and exits. Also, all price swings will be at the exact same angle. This will smooth out any indicator that can run on a Custom Chart.

This begs the question of which Renko brick size to use. For your purposes, it sounds like you already have a good entry strategy, so you can work backward by running through the brick sizes that simply look good with your entry strategy applied. As a former U.S. Supreme Court Justice, Potter Stewart, once said about obscenity, "[I can't definite it] but I know it when I see it." Similarly, you will know when you see the best brick size. I highly recommend manually running through the Fibonacci Sequence numbers as potential brick sizes. Assuming that you enter upon brick close, your ideal safety stop would be one brick close away in the opposite direction. Keep in mind that any currently forming brick can move almost 3x its brick size before closing--there are no parallel bricks. Avoid extra bells and whistles like wicks or custom brick offsets. They just reimport noise into an otherwise smooth environment.

Alexis Napoli #:
What type of indicators work best for you with gold? I've found that traditional MAs get whipsawed during XAUUSD's choppy phases, but I'm curious about your experience.

Assuming that you've restructured your chart, have a fresh look at plain old MA's... particularly, EMA's. Think dynamic stops here.

I should note that it is well within reality to build a profitable strategy using nothing but a Renko chart and MT5's "stock" indicators... and I don't mean the newer ones. I'm talking about indicators that also came with the early versions of MT4. Profitable trading can be fairly straightforward, if we consider Custom Chart utilities straightforward, that is.

Alexis Napoli #:
Do you notice significant differences in how this system performs across different trading sessions? Gold seems to behave quite differently during Asian consolidation vs NY breakouts.

No. Gold futures are one the most liquid instruments that is traded throughout the major sessions. I've also found no material difference in XAUUSD pricing that would prevent me trading XAUUSD if it were legal in my home country, al least as far as my MFT swing trading is concerned. I have no problem with my time filter set to trade from 8pm to 5pm NY time x 5/week (the CME futures exchange is U.S. Chicago time where 5pm NY is 4pm Chicago).

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