Getting into Gold Trading Online
For centuries, gold has been used as a medium of exchange. Over time, our financial institutions have become more complex, and our understanding of economics has grown. Yet, gold remains an essential financial asset to this day.
Although centuries have passed, many traders still like to hold onto gold. Moreover, when stock markets show signs of decline, investors quickly revert to the norm. In this case, they flock to gold like it’s a haven, immune from any of the root factors that caused the stock market to tank.
Before we proceed any further, you have to understand how to classify gold first. Typically, most experts will categorize gold as belonging to the commodities market. Commodities markets also include other precious metals, including silver and platinum.
Why Gold is Valuable
It’s no coincidence that gold remains a popular investment vehicle for many traders and investors after all these years. Today, various options exist, such as derivatives, stocks, cryptocurrencies, etc. Yet, people continue to hold onto their gold reserves. Moreover, many traders actively consider gold a safe investment – a statement that can baffle many people.
The reality’s a little more complex. For starters, gold isn’t immune to price volatility either. Various political, economic, and social factors can cause gold’s price to fluctuate. However, one of the reasons why traders prefer to have gold reserves is because governments have less sway over its price. For instance, governments can easily influence the stock market through their monetary and fiscal decisions. However, such decisions don’t have much of an impact on gold. Likewise, a central bank’s decisions also don’t affect gold. Hence, many investors often view gold as an insurance policy. During economically challenging times, they’ll convert some of their assets into gold.
Furthermore, it would also serve you well to note that many traders like to trade gold for hedging purposes. Sometimes, gold and other precious metals will have an inverse relationship with the financial and derivatives markets. In such instances, if traders expect the financial markets to decline, they’ll transfer their holdings into gold to balance out the losses they’ll make from the financial markets. Using gold as a hedge is a very popular strategy that many investors and traders use.
Now that you know why traders and investors value gold so highly, it’s time to delve into gold trading.
Gold coins
Trading Gold Online
Here’s everything you need to know about trading gold online.
Define Your Goals
You’ll want to start by having an idea about why you’re investing in gold. Some people want to buy gold as an insurance policy. These people are usually looking to possess gold physically. On the flip side, some people only want gold as a store of wealth. Likewise, some investors only trade gold so they can take advantage of price fluctuations to make profits. Depending on your goals, your investment strategy and plan will vary.
If you’re interested in physical possession of gold, you can do it online. You’ll find various sites, dealers, and individuals offering gold bars. However, they’ll charge you a sizable delivery fee and insurance for sending the gold to your location. Many people look to physically possess gold as an alternative currency or an inflation hedge.
However, it would serve you well to remember that you can’t actively trade gold in the United States without opening a commodities account with commodity exchange. A commodities account also opens up new avenues for you, enabling you to trade gold futures and options.
Conversely, you might also want to consider using a stockbroking account to trade gold ETFs. You can also use this account to buy shares of gold mining companies. If your goal is to accumulate wealth over time, gold ETFs and gold mining company shares can serve you well.
If you’re only interested in trading for speculative purposes, you’ll need to apply to sell and buy gold futures on the COMEX. However, US-based traders should note that they can’t use CFD contracts for trading gold under the Dodd-Frank Act.
Gold Bars
Develop a Trading Strategy
Once you’ve identified your goals, you can start developing a trading strategy that helps you meet them. You’ve got to realize that gold trading is similar to stocks and forex trading in many ways. You’ll come across day traders and scalpers in the gold trading world. Likewise, you’ll also come across investors who plan to hold onto gold for the long run. In most instances, your goals determine the type of strategy you’ll be using.
Short-Term Strategies
If your goal is to trade gold for a profit, you’ll likely be day trading or scalping. However, it would serve you well to note that trading gold in the short run is far more complicated than it seems. You’ll need to develop a comprehensive strategy for trading gold futures. In addition, most gold brokers will require you to put up a sizable deposit before allowing you to trade.
Short-term gold traders need to know how to perform technical analysis. In addition, they should also be able to read historical gold price charts and determine patterns.
Medium and Long-Term Trading
If you’re planning on trading gold in the long run, you’ll still need to have a comprehensive strategy. You’ll need to consider the underlying factors that impact the price of gold. These factors include things like production figures, supply, and demand.
Moreover, market sentiment can also play a massive role in driving gold prices. Geopolitical events often impact the commodities market. Events like war, elections in gold-producing nations, and central bank gold reserve shifts can impact the price of gold.
In addition, you’ll also want to keep an eye on the Commodity Futures Trading Commission’s weekly report. The report, titled Commitment of Traders, is released every Friday. It provides a breakdown of the gold market, including open interest in gold futures. It also contains information about options on futures.
Pick a Broker
Once you’ve determined your goals and trading strategy, it’s time to pick a gold broker. You can trade gold futures and options on a commodity exchange if your capital is large enough. Another way to gain exposure to the gold market is to buy gold mining companies’ shares and purchase Gold ETFs. However, if you are a retail trader with limited capital, you may be better off trading gold CFDs with leverage, on the platform of a reputable CFDs broker.
Once you’ve selected a gold broker, you can try out your trading plan in a demo account.
Gold Denominations
Get into Gold Trading with Crystal Ball Markets
If you’ve been searching for a gold trading platform, your search ends here. Crystal Ball Markets is one of the best CFDs trading platforms to trade. If you’re interested in gold, silver, and metals trading in general, we’ve got you covered.
Visit our website for more information. Alternatively, register with us today to get started.