A Simple Guide To Gold Trading

 

Gold has been used as a Money for numerous years and the value is always changing. Public exchanges are utilised to exchange gold and supply and demand determines the price. Investors often speculate on gold or purchase and sell it to earn a profit. Day traders make a profit as a result of short-term price movements. The gold is not physically in the hands of the investors because the transactions are electronic. The trading accounts reflects the losses and profits. The most common way to trade gold is with a futures contract. This is an agreement to purchase or sell gold at a predetermined date in the future.

 

Contracts or trades are Closed by day traders every day. The gain is determined based on the difference between the purchase price of the gold when it was purchased and the cost when it was marketed. GC is the standard gold future and is for 100 troy ounces of gold. MGC is the micro gold future and is for 10 troy ounce. Gold moves in increments of $0.10 on the futures exchange. This is the smallest motion possible regarding a futures contract and is called a tick. The profit or loss is dependent on the amount of ticks the price has moved from the time the gold was purchased. Every contract contains a tick value.

 

The tick value for a standard contract is $10. The contract is for 100 ounces of gold. When this is multiplied by the tick size of $0.10 the amount is $10. This means every tick is a gain or loss of $10. The tick value for a micro contract is $1. This contract is for 10 ounces of gold. Every time the tick moves a gain or loss of $1 occurs.

 

The futures broker such as MarketGBP determines how much cash is required in an Account for a futures contract. There must be enough money to cover any possible losses in the accounts. This is $500 for an MGC contract or $1,000 for a GC contract. The funds to cover the contract and any possible losses must be in the account before the contract being purchased. An Intra-day margin is the amount of money the broker likeĀ Trade 111 needs to open a position for day trading. This amount depends on the broker and it will change. The amount required makes the assumption the investor is trading and will shut out any positions before the closing of the market that day. If the place is left open overnight the requirements for the Initial Margin and Maintenance Margin go into effect. This means there must be additional funds in the accounts.

 

Some funds offer trades Using a stock exchange. The moves on gold prices can be utilised as a basis for a trade if the investor has an account for stock trading. The gold is held in reserve by the trust. The value is based on the price of gold. This is usually a tenth of the current value. This means if $1500 is the price for gold futures the trust will be trading at roughly $150. A gold trust trades the same manner as stocks. ETF’s and stocks generally trade in share blocks of 100. The amount of money won or lost depends on which way the price of gold is shifting. The amount of money required from the account is dependent on the position size, the leverage and the ETF.

 

In the United States ETF’s Or day trade stocks require a minimum account balance of $25,000. The leverage And income available to the individual will ascertain how much money they want To have available in their accounts.

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