Gold Trading Tips

by Darwin on July 6, 2016

Investing in gold has turned out to be the most popular option during market turbulences and political and economic uncertainties. Some people prefer trading forex, but when its market is volatile, most will turn to gold as “evergreen” currency of choice. It’s known, that despite all its benefits, the gold market is a tricky one and it requires some extra trading skills. The gold market has “its own will” and it doesn’t move like all the others, but if you pay special attention and analyze patterns and rules thoroughly, you’ll be much closer to success.

If you’re serious about trading gold, here are some top gold trading tips to follow before investing your money.

When to invest in gold

We already mentioned that gold investments flourish when times are tough. This means inflation, wars, forex market volatility, threats to oil supplies and other geopolitical uncertainties. Even the risk-shy traders will use this as an opportunity and purchase gold as a hedge or a safe haven. However, some experts claim that it’s best not to wait for a total economic breakdown. Instead, keep track of the situation, learn how to anticipate the crisis and purchase gold before it, while everything is still calm and quiet. When concern about crisis spreads, it leads to a greater demand and gold shortages (as everyone wants to invest in it).
Buying gold in physical form (bullion)

If you want to trade safely, investing in gold bullion (coins and bars) is always a sound option. It gives traders a sense of security and it feels great when you know that your investment has genuine money value. This way of trading carries less risk, but you need to pay for the storage. The only downside of this type of trade is that you accumulate profits slowly. This is why it’s suitable for those who have lots of money to invest, but don’t want to risk and don’t mind waiting a bit to see higher returns.

The rules of online trade

If you’re looking for the cheapest way to trade gold – trade online. You won’t have to invest in safe storage space and this way of trade doesn’t require as much capital as trading bullion.  The profits may also come faster. There are several ways of trading gold, without actually holding it and they offer increased transparency and flexibility, comparing to purchasing physical gold. So what are the downsides and risks of online trade? Its volatility of prices and various market manipulations – e.g. if the prices fall, customers will be paid as per current rates, which is loss to investors.

To keep it simple – trade ETFs

The gold market is quite demanding and if you think that forex is complicated and beyond your skills, you better think twice before investing in gold. However, one of the best ways to begin trading would be gold exchange-traded funds (ETFs) as they are one of the simplest methods. Some prefer gold futures over ETFs but the truth is that both ways have their benefits. One of the biggest benefits of trading ETFs are lower expense ratios compared to other managed funds and unlike futures, they don’t expire.

How much should you buy?

There’s one thing we haven’t mentioned, and that is the reason why gold is considered a safe haven asset. It’s because the gold will always keep at least some of its value. However, this doesn’t mean that gold market isn’t volatile – you can gain and lose much, as on any other market. For instance, gold can easily vary from 80 to 100 pips just within a couple of minutes. When buying physical gold, experts recommend having no more than 5 percent of a portfolio in gold bars and coins.

Timing is everything

There’s one thing every trader should know: gold trades well during most of the day. There are some hours to avoid if you’re a gold day-trader. Day trades depend on gold volatility (price movement) so you should avoid hours when gold doesn’t move well. The largest markets are in London, Zurich, Sydney, New York, Hong Kong and Tokyo. You should avoid trading at the beginning of the day in Asian market and the end of the day in New York.  Biggest moves happen when both London and New York markets are open.






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