Fluctuations in the price of gold, as in the case of all other commodities, are very strong and it presents traders with an opportunity to create considerable amount of profits in a short period of time. This is one of the major reasons as to why this precious metal asset is traded by most of the individual traders who have some understanding about the financial markets. However, a common question asked by most of these traders is ‘how to trade gold online?’ The goal of this post is to provide some insight into online gold trading.
Trading In Gold – Benefits
In order to trade gold online, you are not required to buy gold bullion or coins. All you need to do is predict whether the price of the yellow metal will rise or fall by a specified time. Therefore, you make low risk investments when you trade gold online. Thanks to technological developments and online platforms, it is now possible for even individuals to trade in gold. You need to use derivative products such as binary options or Contract for Difference (CFD). On some of web-based forex platforms, you can trade gold against the USD or EUR as well. These online gold trading options allow you to speculate the upside or downside movement of the price of gold. Some of the other benefits of trading in gold are as follows:
If you are a new or inexperienced investor, you can probably think of trading in gold assets because of several factors. The first and foremost aspect is that gold is extremely volatile compared to many other assets. This is to say that the price of gold moves suddenly and by an ample amount. This enables you to make substantial short-term profits. In addition, it is interesting to note that you can make profits whether the price of gold is moving up or down.
The volatility of gold’s price is actually beneficial if you consider the fact that forex brokers offer substantial leverage on CFD products that they offer. This helps you to greatly increase your earnings.
Gold is not considered to be a safe haven any more, but it continues to be an investment option for institutions like banks, especially during high inflation periods. This is because price of gold does not vary on the basis of inflation numbers. Gold retains its value, whereas currencies lose their value when inflation rises.
Finally, it is important to note that gold is extremely sensitive to the supply and demand variations. Therefore, it is always better to trade gold in the longer term. This is because the production is nearing its limits, but the demand is on the rise due to its extensive use by the industry, especially the booming Chinese industry.
Online Gold Trading Platforms
There has been a steady increase in the number of online trading platform providers over the past few years. The aim of these brokers is to provide a means to individuals and institutions to trade a varied set of most popular assets such as shares, currencies, commodities and indices.
All you have to do is open a trading account on one of these platforms that you determine would help you achieve your financial goals. After opening an account and depositing the minimum amount specified by the platform provider, you can start trading gold assets being provided by them. In fact, trading involves predicting the increase or decrease in the price of gold and accumulating attractive profits rapidly. If you are new to trading or have limited knowledge on financial markets, there is no need to worry. These online gold trading platforms are designed in such a way that they simplify the steps involved in trading. Actually, these platforms are simple as well as easy to use.
How Do Trading Platforms Work?
It is easy to understand the operation of the gold trading platforms. Once you transfer funds to your trading account, you will be able to enter the platform and place CFD orders. If you feel that the gold price is likely to rise, then you can decide the amount you want to invest and buy CFDs. When you feel that the price increase is sufficient to provide desired profits, you can sell your position. On the other hand, if you feel that price of gold is likely to fall, then you must take sell position and buy back the position when the price has fallen enough.
In order for you to make the desired level of profits, there should be a large difference in the rates. The brokers who allow you to trade gold online take this aspect into consideration and they provide you with what is called leverage. With the help of leverage, you can multiply your profits. Small variations can be made use of to accomplish a great deal of profits. Of course, the losses can also be large depending on the leverage provided. Leverage varies from 1:100 to as much as 1:1000. Therefore, you have to judiciously make use of leverage.
Which Gold Trading Platform Should You Use?
Now that you have some idea as to how to trade gold online, you need to choose the right broker, who provides an online trading platform, to work with. You need to take some time and do some research in order to identify the gold trading broker. Some of the aspects that you need to take into consideration for this purpose include the following:
How much leverage does the broker provide?
What tools does the broker provide for analysis? (Charts, news feed, etc.)
What additional services does the broker offer? (Signals)
How much money should you deposit initially to start trading and what currency options are available for operating your trading account?
Is it easy to deposit funds into your account and withdraw funds from your account?
Does the broker offer any welcome bonus?
What is the quality of the platform? Is it easy and simple to use?
It is definitely worth the effort because working with trusted gold trading broker will enable you to achieve your financial goals faster.