5 tips to trade gold and silver on the Forex
“Gold Philharmonics are Very Competitivel” (CC BY 2.0) by moneymetals
At the same time the trading of currencies, the FOREX allows investors to trade in commodities such as gold and silver. This is to bet on an increase or decrease of the price of gold and silver. The interest of the trader these raw materials is their high volatility, which can permit attractive profits.
If you start, here are our 5 tips to trade gold and silver on FOREX.
Monitor industrial activity
To understand the prices of these commodities, it is necessary to understand their uses. The demand for gold comes primarily from the industry of jewellery. The largest importers of gold in the world are Switzerland, China, Hong Kong and India. Their economic situations influence, so the price of gold.
The money is mainly used by the industry, in particular for the manufacture of high-technology products (computers, mobile phones, laser, ..). Its course is therefore more closely linked to the industrial production and thus household consumption. The financial markets give a good indication of the health of global economic activity.
Follow the level of the global reserve
The prices of raw materials are correlated to the available stock, because gold and silver are limited resources. The level of reserves in the world and the situations of the main producing countries affect their current financial.
Watch the price of the dollar
Gold and silver are mainly quoted in dollar, creating a relationship between their courses. If the dollar is strong, investors prefer to buy other assets, leading to a fall in the prices of raw materials. Conversely, if the dollar is weak, gold and silver, becoming attractive investments. The economic and political situation in the United States can, therefore, influence the price of raw materials.
Be mindful of inflation
This board is mainly true for gold. Its historical status as the precious material he has conferred on them a status as a safe haven. Gold has often been used as a standard currency, and has therefore been heavily stocked by the states. It is, therefore, generally not very sensitive to inflation, that is to say that its value depreciates rarely. In a period of inflation, investors are turning to gold to maintain their capital.
Use the stop loss and use a leverage of limited
“$GLD and $SLV Prices as of July 24 2017” (CC BY 2.0) by moneymetals
There are good tools of risk management in FOREX to avoid big losses as the stop loss. The stop loss allows you to specify in advance the level under which it wishes to sell his or her option. If ever the courts were to fall beyond your anticipation, your position will be automatically liquidated. Therefore, it is not necessary to continuously monitor the price of gold and silver. Finally, carefully use the leverage. Do not invest beyond your capacity.
Generally it is necessary to remember that, by its sensitivity to the business climate, money is an asset that is trade on the short-term, in contrast to gold for its safe haven status to trade in the long term.
I hope these tips will help you start. Good predictions and good trading!