Day Trading Gold
Whether you are considering gold trading for investment purpose or just for the revenue bit then you need know some basic aspects about it before you engage in the trading. One of the things that you should know is that gold is traded in bullion or equity. More so, each of this category can be further broken down to come up with coins and bars. You can also have it as stock or mutual fund. More so, you can have day trade in gold. Gold day trading is just like any other form of day trading, you cannot hold to the gold for more than 24 hours (daily activity).
If you are interested in day trading you need to as well know the trading terminology and when to practice the same. For instance, there are two words that you will more than likely come across in your trading experience. One is “put” and the other is “call”. You need to know when to call for the same. For instance, if you want to buy a stock then you “call”; if you want to sell then you “put” (keep in mind that these options are complicated and they are more than the simple wordings as presented here).
You also need to know that gold trading is performed as it is done with foreign currencies, using the OTC method (over the counter). This implies that the trade is performed directly between the two involved parties. Just like trading in foreign currency, trading with gold is non-delivery trading, which means that you do not require the physical purchase or even selling of the commodity.
If you decide to trade in gold bullion, you need to make sure that you use a gold certified supplier and also make sure that you buy your gold from an approved bullion market gold bars. It is good to also note that gold trading is a very volatile venture hence if you are just seeking a beginning in day trading; this is not the best place to start.
You need to acknowledge that day trading gold is usually influenced by the fundamentals and therefore if you want to make great trades then you need to avoid using a purely technical approach. You also should avoid basing your trade with the trends that happen when there is a lot of market excitement. For instance, do not make your trades when there is ongoing news about indicators or even forecasts. Remember that this news just help spark trading volatility. Some people want to trade when the news is ongoing, but remember that trading the news is not a long lasting solution and as much as you might make some money out of it, you can also end up losing so much more.
With the above in mind, before day trading, first chose your kind of company that you want to trade in. make sure you have an idea of the management team, the balance sheets, together with the geological surveys so that you can have a hint of how much ore they still have in stock. Take a look at the charts so as you know how the prices are changing. You should consider the major fundamentals that are affecting the price.
Always remember that day gold trading is just like trading any other commodity only that with gold, the price reacts inversely proportional to the market sentiment. For instance, when the economic environment gets tight and harsh that is when the prices of gold are at their high and more trading therefore takes place. Remember that any form of trading is risky and the same applies here.
1. Stock- refers to capital raised by a corporation through the issue of shares entitling holders to an ownership interest
Leave a Reply