For the past couple of years, Smart investors and traders who understand where the market trend is heading will get into gold trading. The gold spot price has broke through the historical price of $1,200 per troy ounce in 2010. The long term gold market uptrend is anticipated to carry on for quite a while although you can find some retracements when the gold price arrived at the $1200 level.
During the period when the stock market crashes along with the financial meltdown, many investors and traders have lost a lot of money. Forex investing then appears to entice many investors because they were told that the currency exchange market is a fantastic place to earn money quickly and effortlessly.
However, when people tried forex trading, 90% of them actually lost a huge chunk of their money and finally feel that it’s quite impossible to make good money from trading. So the concern is, is making money from trading that complex?
Well…it can be very difficult for people who don’t even understand any of the basic fundamentals and technical analysis. But this is not the case for the savvy and smart investors. Those guys know precisely what will happen to the economy when a financial crisis takes place, and the place which they made lots of money from is the online gold trading market.
So how do you trade spot gold online?
Many people do not know that they can actually trade gold on the forex platform, Metatrader 4 (MT4). Several forex brokers like Alpari, FXDD etc allow spot precious metals to be bought and sold against the U.S dollar on the MT4 platform.
In the spot gold trading, the ticker representing gold against the U.S dollar is XAUUSD and XAU stands for one troy ounce of gold. For example, the quote is 1200 XAUUSD in the spot market, so this means that 1 troy ounce of gold is equivalent to $1,200 USD.
How are we certain that precious metals are on a uptrend for the long term?
Precious metals like gold and silver are highly demanded as they are greatly used in the manufacturing sectors. When the global economy is recovering from the financial crisis, production from industrials will increase and consumers will increase their spending too, this is where the prices of precious metals like gold and silver will rise.
The big thing is that the government debts have been increasing to trillions and thus this has forced the U.S dollar to decline. But what government did was to print trillions of dollars to pay for their debts. When trillions of dollars are printed by the government, inflation occurs and then the value of U.S dollar declined.
The smart investors will then rush to buy gold to hedge against inflation, which then push up the gold price. This is always happening throughout the history.
What is the main edge of online gold trading?
Leverage is necessary in forex, so spot gold trading provides the advantage of leverage too. In forex, one standard lot of contract is $100,000. In gold trading, a standard lot is equal to 100 troy ounces of gold.
For example, you plan to buy 1 standard lot of gold. One troy ounce is $1,200, so 100 troy ounces will cost you $120,000. But since the spot gold trading comes with a leverage feature, let’s say 100:1, you will now need only $1200 in your margin account to buy 1 standard lot of gold!
Let’s say the gold price now goes up to $1204, 1 standard lot of gold contract can easily earn you $400 ($120,400 – $120,000). But if you are not leveraging on the online trading, can you imagine how much you have to fork out to purchase 100 ounces of gold? You have to fork out around $120,000 and it’s not even inclusive of storage fees!
Now you have a chance to be smarter than those savvy investors…invest in online gold trading instead of buying physical gold which will cost you a ton.
About the Author:
To learn how to trade gold online successfully using a simple, time-tested and proven gold trading system, instantly download my FREE “The Golden Secret To Unlock Your Riches” ebook at http://www.goldsilverexpert.com/freegoldreport.htm now.
The author, Daniel Su, is a professional currency and commodity trader who provides free premium gold trading tips and resources to help traders achieve their long term financial success at http://www.goldtradingtips.com.
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