4 Tips for Successful Online Gold Trading
The incredible thing about trading gold – and trading products like gold contract for difference or CFD – is that you can benefit from the inherent characteristics of gold, without actually having so much as a speck of gold dust.
The freedom, flexibility, and challenge that this type of high-value online trading offers people are some of the principal draws and the reason that so many are eager to get in touch with their golden sides (in business speak: trade gold). However, like anything in life, in order to be successful in trading gold, you must understand that gold trading isn’t as simple as it seems.
Here are four tips for successful online gold trading.
Gold trading is not for beginners. This isn’t to discourage anyone dreaming of becoming a master online gold trader. This is just to say that gold trading is not the place to start if you’re new to trading.
Online gold trading is a difficult market to understand without basic financial literacy and prior knowledge of foreign exchange (forex) trading. Thus, you are better off learning the basics in this financial market before deep-diving into gold-trading.
Once you’re ready and feeling confident in your understanding of the underlying concepts of forex trading, you may start dabbling in gold. You’ll be equipped to deal with the gold market’s unique idiosyncrasies, such as:
- Gold has a massive daily range, and a range of 300-650 pips is standard. By the way, learning how to calculate gold pips is a must.
- Gold can be extremely volatile, and the price is constantly rising and falling.
- Gold trading tends to punish lousy trading but does trade well most of the day.
- Gold respects support/resistance exceptionally well and price action dominates.
From the shortest to the longest holding period, here are the four styles of trading, as well as their time frames and holding periods:
- Scalp trading – very short-term; holding period: seconds to minutes, no overnights
- Day trading – short-term; holding period: day only, no overnight positions
- Swing trading – short-term; holding period: days to weeks
- Position trading – long-term; holding period: months to years
When deciding what your style of trading is going to be, you need to examine an assortment of factors. These include the following:
- Account size
- The amount of time you have to spend trading
- Your experience level
- Your personality traits
- Your risk tolerance
For example, if you love high risk and enjoy being really involved in the market at all times, scalp trading is probably for you.
One of the hardest lessons for online gold traders to learn is that of overtrading and undertrading, and to which end they tend to stray. Ideally, you want a middle position that is perfectly balanced between overtrading and undertrading, but knowing exactly how much should be traded on a daily basis is easier said than done.
If you are a scalper style trader, then you’re generally going to require more trades. On the other hand, if you’re a position trader, then you’re going to want to be more selective with your actions.
Instead of focusing solely on the quantity of trades you make, set your sights on quality.
As the old adage goes, “Patience is a virtue.” That sentiment has never been more true than in the context of gold trading.
When it comes down to it, in this business, timing is the key to success. For you to hit the jackpot, your opening trade needs to be correctly timed, a move that can only be adequately done with a comprehensive understanding of charting techniques and market trends.
Online Gold Trading: An Exciting Way to Diversity Your Portfolio
If you’re looking to diversify your investment portfolio, online gold trading may be the way to go. Regardless of your style of trading, you’ll need to create a trading plan that you can diligently stick to and learn from.
Success in this market comes from a healthy mixture of hard work, sound judgement and patience. Cheers to your golden trading life!
