How To Trade Gold – Why Online Gold Trading Is Better Than Buying Gold Coins
Learning how to trade gold with online gold trading is getting more popular and this is primarily because gold is least affected by inflation during an economical downturn. This is especially so in the present conditions of economical worries around the world, particular the crisis in Europe and stagnation in the U.S. However, exactly what kind of gold you trade or make investments in and how you actually do it is essential if you really want to make consistent profits. I will provide some gold trading tips for you right here.
To start with, buying gold coins is an example of a good investment while buying jewelry may not. By buying gold coins, you are investing for the long term. Some of these coins such as the American Eagle gold coins have intrinsic value as they are made of pure gold. Buying gold coins can be challenging, thus choose the right agency to purchase them from. Additionally, pay attention to the latest gold prices and try to buy when there is a correction in the gold price. Just like any investment, the time-tested investment rule of buy low sell high still is applicable when buying gold coins.
As an alternative, you can contemplate to trade gold online instead of buying gold coins. However, before you do this, it is essential that you must find out how to trade gold the correct way by understanding what factors affect it’s price action. To understand how to trade gold, you need to be well informed of the characteristics of gold. You should also realize the risks involved and take the required steps to diversify your investments.
The following step is to decide what instrument to trade gold. You can do so via spot and online gold trading. Between the two, online gold trading is chosen. The benefit is that you will never ever come in contact with the gold, therefore you will not have to be concerned about its security or safety. You are also in a position to use the leverage available by your online broker when you do online gold trading. This makes it possible for you to buy much more gold with less bucks.
You can expect to make higher returns from using a lower capital. You can trade gold online by buying and selling Exchange Traded Funds (ETF) such as SPDR Gold Trust (GLD). The advantage of trading ETF is you can trade for or trade against gold. This suggests that if you are generally bullish on gold, you can buy the GLD and vice versa. In fact, GLD is now one of the most widely traded and popular ETFs nowadays.
Online gold trading has its pitfalls, just like stock trading. So do your own research first before you put your real money. Learn to do technical analysis of the gold charts to pinpoint the direction of the major trend in gold price – is it likely to continue going up or down. Before you enter a trade, understand your stop loss level which is the price you will get out of the market. A good opportunity to buying gold is whenever the reward to risk ratio is at the very least 2. Watch the trends in the market and trade with the major trends, not in opposition to it. Only by trending with the major trend are you capable of making money consistently in your online gold trading.