During the period when the stock market crashes along with the financial meltdown, many investors and traders have lost a lot of money. Smart investors then went on to trade forex as it's a bigger market and many people believed that they can earn money fast and easy.
However, when people tried forex trading, 90 percent 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 issue is, is being profitable 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. They are the ones who know which market will rise during a financial meltdown, so online gold trading is the so called 'holy grail' market that they made a ton of money from.
How do you actually trade gold spot online?
Many people do not know that they can actually trade gold on the forex platform, Metatrader 4 (MT4). Some of the forex brokers allow spot gold and silver against the U.S dollar on their trading platform.
In the spot gold trading, the symbol representing gold against the U.S dollar is XAUUSD whereas XAU represents 1 troy ounce of gold. Here's an example, the gold spot market quote can be something like 1200 XAUUSD, which means that one troy ounce of gold is equal to $1200 USD.
How can we be certain that precious metals are on a uptrend for the long run?
Precious metals like gold and silver are highly demanded as they are substantially used in the construction 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 the U.S dollar keep declining. But what government did was to print trillions of dollars to pay for their debts. When trillions of dollars are printed by the federal government, inflation takes place 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 has been the case throughout the history.
What's the biggest edge of online gold trading?
Leverage is necessary in forex, so spot gold trading has got the advantage of leverage too. In forex, one standard lot of contract is $100,000. Whilst for spot gold, one standard lot is worth 100 troy ounces of gold.
For example, you see that the gold price is going up so you want to buy a standard lot of spot gold. However, with a 200:1 leverage, you'll only need $600 as a margin in your trading account to buy 1 standard lot of gold.
Now the price of gold went up to $1,205, so the standard lot of gold contract will make you $500 profits ($120,500 - $120,000). Can you imagine buying 100 troy ounces of physical gold? You have got to fork out around $120,000 and it's not even inclusive of storage fees!
This is the time to get into online gold trading and ride on the up gold trend. Although you can buy physical gold, you are being wiser than other investors by utilising on smaller sized capital.
