How To Profit From Gold Trading

Trading in Gold can be executed in many different ways nowadays. The most frequently used method for private investors is trading on a margined basis. By using margin there is no need for a secure lock-up and a fork lift truck.  Spot trading, option trading and spread betting are the most commonly used forms of execution. By using these methods traders only have to pay a fraction of the value of the gold they are wanting to trade.  An ounce of gold may cost $1400 but to trade an ounce using margin will cost as little as $14. The maximum leverage Vantage FX may offer is up to 500:1. To find out about VantageFX UK margin offers please click here. The added advantage of trading with these instruments is you can profit when the price is falling as well as rising. Not so when taking physical delivery.

The same principles applied to forex trading can also be applied to Gold trading. If you think the price is going to rise, you buy and if you think it is going to fall, you sell. The chart formations, patterns lines etc. work in the same way for gold as they do for forex. The price for trading in gold is quoted against the US dollar.

There is much written about the true value of gold, whilst there is clearly a global demand and once even the basis for a countries total currency value, it is dissimilar to a commodity such as Oil. Whilst Oil will often rally in the event of a conflict, like we are seeing now because of the Libya and regional uprisings, Gold will also often rally but for a different reason.  The reason Gold rallying in uncertain markets is debatably illogical. The Oil price may rally as supply may be interrupted and stockpiling seen as necessary, as it is still the major global fuel to make countries tick to be short of Oil would worry any government. If a country could get no Oil that would just about finish any country off. If a country ran out of gold what would the real consequences be? The flight to gold as a safe haven in conflict is based on the fact that you can, to some degree, eliminate a lot of variables that go through a traders’ mind when a market becomes nervous. An example could be, does the country have economic ties to the country in conflict? How will be it affected? Which could then impact the stock market which could affect the currency? The common consensus is these considerations and judgement calls can be simply answered by buying gold as a hedge.

As with a lot of trading, bare facts don’t always represent the market so a prediction based on the fact that gold is not an important commodity is not a guarantee the price is heading to $10 an ounce from the current $1430 an ounce. To get a day to day feel for the Gold market direction you can look at the charts in the same way charts are used for Forex trading. Trading strategies can be applied in exactly the same way with trend, trend lines and support levels all being gleaned in the normal way. Generally Gold is a market worth getting to know as when the FX markets become volatile or unpredictable an investor may wish to look for an alternative market outside the norm and Gold has many similar attributes to make understanding the market a simple transition.

If you would like to know about trading methods for Gold or would like to set up a demo trading account please click here or visit VantageFX UK.