How to Trade Gold After the Metal Hits a Record High
How to Trade Gold After the Metal Hits a Record High
Looking at the gold market, the metal seems to have run out of friends. Not so long ago gold achieved its record high of $1250 per troy ounce. However, that level may prove to be the high for now.
The problem is that Countries across the world are now moving into fiscal contraction. Whilst there are obviously a lot more Dollars/Yen/Pounds, and even Euros, around these days this has to be equated with the fact that gold has now almost quintupled since the UK mistakenly sold off half of their gold reserves in 1999.
If you look a little deeper into the gold market though it appears that every defunct gold mine on the planet has been reopened and the flow of bullion is increasing well beyond retail demand. Perhaps the current levels of gold production are purely fulfilling investor demand.
If you are looking to trade the commodities like gold then bear in mind that there are downsides to all forms of investing. When I trade on a short term basis I usually use a financial spread trading account (note that with spread trading you need to be careful because you can lose more than your initial investment).
Having said that, spread trading suits a lot of day traders because there are a wide variety of markets on offer, you are not limited to stocks and shares. You can trade stock market index values, foreign currency pairs and commodity prices like Gold and Oil.
Also, with regards to the risk you can use a Guaranteed Stop Loss order. A Stop Loss is a useful order and an important risk management tool. With a company like GFT, when you place a new trade, you simply set a Guaranteed Stop Loss order at the same time, this is an order to close your trade if the market hits a specified level. In other words, the order will stop you losing any more money if the markets move against your position by a specified amount.
Another aspect that may suit investors who trade a lot is that with financial spread trading there are no broker's fees and/or commission charges.
Whilst this is all very useful one of the most interesting aspects when the markets are so volatile is that spread trading lets you trade a market in both directions. You do not have to speculate on markets to go up. If you think the price of gold bullion will go up you can speculate on it to go up. If you think the price of gold bullion will go down you can speculate on it to go down.
A word of warning before you trade though, ensure that spread trading matches your investment objectives. Make sure you familiarise yourself with the risks involved. Spread trading carries a high level of risk to your capital. Seek independent advice if necessary.
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