Gold has been a shining star of wealth and security for mankind throughout time. From adornments to technology, its allure knows no bounds. However, this precious ‘yellow metal’ gains the most attention during times of economic uncertainty. Enter the realm of online gold trading, where fortunes are forged and trends are born. Find out what influences the gold price, simple gold trading strategies, and how to start trading gold online!
What is Gold Trading?
Gold trading involves buying and selling gold to profit from its price changes. It is favored by traders due to its inherent value and reputation as a safe investment. As a longstanding asset in the global economy, more people are getting involved in gold trading. It is highly regarded for its stability and is a preferred choice for preserving wealth.
Typically, traders adopt a long-term approach to capitalize on extended trends. People engage in gold trading for various reasons, such as speculative purposes, the desire to acquire physical gold, or as a safe haven asset against instability.
Can Gold Be Traded Online?
Yes, it is possible to buy and sell gold online. Gone are the days of storing physical gold. Embrace the digital era, where trading gold online is as effortless as a click. Click your way to success, choosing from spot prices, futures, options, shares, ETFs, or CFDs.
How Multiple Forms of Gold Trading Work?
There are multiple ways to trade gold, including:
- Bullions: Physical gold in the form of bars or coins, with the value determined by type and weight. Transaction fees, storage costs, and insurance may apply.
- CFDs: Contracts for difference (CFD), allowing traders to speculate on gold’s price without owning physical gold. Returns are based on price changes during the contract period.
- Futures: Contracts for buying gold at a predetermined price on a specified date.
- Bonds: Documents representing ownership of a specified value of gold without physical storage.
- ETFs: Exchanged-traded funds backed by gold, similar to stocks, with costs tied to gold’s price.
To start trading gold online, you must open a trading account with a reputable broker that offers gold trading services. CFDs shine as a simple and convenient choice among the wide range of options available online. But beware! The golden path has its twists & turns, and it is essential to understand the unique characteristics of world gold markets and the hidden pitfalls that can rob profits.
What is the Best Way to Trade Gold Online?
Trading gold CFDs has proven to be a popular choice since it allows you to speculate on the price of gold without owning the actual metal.
Here are some benefits of trading gold through CFD brokers:
- Elimination of additional costs: Buying or selling gold online eliminates any additional fees that come with physical transactions.
- Efficient way to speculate gold price: Spot gold CFDs track the spot market price, making them the cleanest and most efficient way to speculate.
- High liquidity: Gold CFDs have high liquidity that allows you to take advantage of price movements regardless of market conditions.
- Leverage: Trading CFD gold allows for greater control over a larger position with less capital thanks to leverage.
- Long and short opportunities: Trading gold CFDs provides long and short opportunities in the market, making it possible to profit from both rising and falling prices.
- No expiration date: Gold CFDs don’t expire until a reverse trade is made, at which point the trader realizes their profit/loss.
- Cheapest way to trade gold: Gold CFDs are also the cheapest way to trade yellow metal, even for people with limited budgets.
CFD brokers (like AximTrade) offer simple and intuitive gold trading online, with competitive spreads and flexible trading conditions. See the full AximTrade Review for more information about our exceptional trading conditions.
Benefits of Trading Gold and Forex Pair:
The price of gold and forex exhibit a positive correlation, indicating that they move in tandem. Traders can reap several advantages from this correlation:
- Diversification: Portfolios can benefit from diversification through gold and forex trading. By leveraging the positive correlation between gold and forex, traders can diversify their portfolios, leading to risk reduction.
- Hedging: The correlation between gold and forex can be utilized for hedging purposes. For instance, if a trader intends to invest in gold but holds a bearish outlook on the metal itself, they can opt to trade the AUD/USD currency pair instead of directly dealing with gold.
- Trading Opportunities: Instances, where the correlation between gold and forex weakens, can give rise to new trading opportunities. Traders can exploit the disparity between gold and the AUD by simultaneously taking a short position on gold and a long position on the AUD.
- Profit Potential: Both gold and forex trading present potential avenues for generating profits. For instance, investors can capitalize on a straightforward gold trading strategy that relies on the correlation between gold and forex.
Understanding this correlation enables traders to identify opportunities, diversify their portfolios, and mitigate risk.
How To Start Trading Gold Online: Step-by-step Guide
Trading Gold online is now very simple and straightforward if you choose to do so with a reputed broker like AximTrade. You can start trading gold online with AximTrade in 5 simple steps.
- Open a Trading Account – Log in to your member account from AximTrade login, and click “+ Open Extra Account” in the top right corner.
- Choose your Trading Instrument – AximTrade comes with a variety of trading instruments like Forex, Metals, Energies, Indices, Crypto, and Stocks. To trade ‘Gold’ choose Metals and select the “XAUUSD.ax” pair.
- Choose your preferred account type – There are several types of accounts to choose from, including Standard, Cent, ECN, Infinite Leverage, and Demo accounts. Here’s how to choose the best trading account type for you.
- Name the Account – Create a name for your account and a strong password (Investor passwords should not be the same as account passwords. Don’t forget to use lowercase and uppercase letters, as well as numbers). Click “Done” to save your changes.
- Start Trading Commodities – Your Gold trading account is now ready to trade. All your accounts can be found under the “My Accounts” tab.
For beginners who find it difficult to take advantage of market movements, you can use AximTrade’s Copy Trade platform and start trading like a pro from day one. Choose from hundreds of successful trading portfolios, and select the one that suits you best.
How to Choose the Best Gold Trading Strategy?
To trade effectively, it’s crucial to determine your trading style and risk tolerance. Once you know your preferences (long-term or otherwise), develop a suitable trading strategy. Understand the unique aspects of gold and factors influencing its price. Study price action, gain market insight, and practice using a demo account to test your strategy risk-free.
Best Gold Trading Strategies For Short-Term & Long-Term Traders
Gold trading strategies vary based on the trader’s time horizon, as short-term and long-term traders have distinct objectives and approaches. Below are effective gold trading strategies suitable for both short-term and long-term traders:
Long-Term Trading Strategies:
- Diversification Strategy: Including gold in a diversified portfolio serve as a hedge against inflation and market volatility. This strategy involves retaining gold positions over an extended period, irrespective of short-term price fluctuations.
- Fundamental Analysis: By analyzing economic indicators, geopolitical events, inflation, and central bank policies, investors can make informed decisions about gold investments. They assess global economic trends, interest rates, and currency movements to evaluate gold’s long-term prospects.
- Trend-Following Strategy: Gold traders often observe long-term trends. For extended trend following, they may utilize 100-day or 200-day moving averages. An upward trend indicates a bullish market, signaling buying opportunities. Conversely, a price below the moving average indicates a bearish trend, indicating potential selling opportunities.
Short-Term Trading Strategies:
- Moving Average Crossovers: Traders identify potential entry and exit points by observing moving averages like the 50-day and 200-day moving averages. When short-term moving averages cross above long-term moving averages, it suggests a bullish trend. Conversely, a cross below the short-term moving average indicates a bearish trend and an opportunity to sell.
- Breakout Strategy: This strategy involves identifying key resistance and support levels on the gold price chart. Traders anticipate significant price movements in the breakout direction when the price breaks above or below a resistance level with strong volume.
- Relative Strength Index (RSI): Short-term traders employ the RSI indicator to measure price movements and their velocity. It helps identify overbought and oversold levels. An RSI above 70 indicates an overbought market, potentially leading to a reversal or price correction. Conversely, when the RSI falls below 30, it suggests an oversold market.
It is crucial to conduct research and manage risks for the success of any trading strategy. Staying updated with market news can also prove advantageous.
Is Gold Trading Profitable?
Gold trading can be profitable, but it depends on various external factors. Gold is a valuable asset that offers high liquidity and excellent opportunities to profit in nearly all environments due to its unique position within the world’s economic and political systems. Here are some key points to consider:
Advantages of gold trading:
- Gold is a trusted store of value and can protect a diversified portfolio from experiencing big losses in a volatile economic climate.
- Gold is a commodity with a world market that transcends national borders, politics, religions, and race.
- Gold trading offers incredible leverage with measured risk.
Disadvantages of gold trading:
- Gold prices are affected by speculators involved in day trading, which can make gold prices volatile.
- Gold is volatile and can swing wildly in either direction.
- Gold trading requires careful consideration of the unique characteristics of world gold markets and the hidden pitfalls that can rob profits.
It is important to develop a healthy respect for the fact that gold is volatile and can swing wildly in either direction.