Gold is one of the most promising investment tools. especially in the long and long term Because the demand for this precious metal will never die. while the level of supply is limited because there are non-renewable natural resources So prices generally go up in the long run as well.

So how to trade gold for beginners to make it profitable? Here are some of his tips:

1. Understand the nature of gold

As one of the oldest currencies in the world Gold has unique characteristics that are not like any other investment instrument, and make it worth it. Some of these characteristics are:

  1. People all over the world are quite familiar with this precious metal.
  2. Gold can hold, feel and have a social symbol.
  3. Gold can be used as an industrial material.
  4. Gold is frequently traded to stabilize the country’s currency exchange rate.
  5. Gold is a non-renewable natural resource.
  6. Like any other investment tool Gold also responds to the country’s monetary policy.
  7. Investor fear and greed
  8. Changes in the exchange rate of the dollar against other currencies.

The above characteristics will affect supply and demand. Inevitably, the short and long term (and ultimately the price) of gold is inevitable. Gold traders need to know the above characteristics to determine when to sell and when to buy this precious metal. You can find out the reaction of gold prices to the above changes by modeling or by reading the various studies available.

2. Set a time frame and goals.

Although gold is suitable for long-term investments But the price of this precious metal is quite susceptible to some of the above changes. for you to understand more Let’s look at the picture below:

Figure 1: World Gold Price
Figure 2: Gold price vs. stocks (source: Investopedia)
Figure 2: World Gold Price
Figure 3: DJIA share price (Source: Google)
Figure 3: DJIA Stock Index

From Figures 1, 2 and 3 above, it can be concluded that the long-term gold price tends to rise. But the price hike was not as smooth as the share price that rose during the same period. This means that if you don’t set the right time to sell gold. gold investment benefits What you gain will not be the maximum or even you will suffer a loss.

So before trading gold Make sure when you want to sell precious metals and what profit goals you want. By understanding the characteristics above, it will be easier for you to know when you should sell gold with more precision.

3. Prepare sufficient funds

Gold is a long-term trading tool, so many experts recommend trading this tool only with a buy strategy. without having to open short-term positions So you need to have enough capital. to avoid getting Margin Call

You can deposit this sufficient funds in the form of a lump sum. (Deposit once and don’t have to deposit again) or use a strategy dollar cost average (One fixed deposit every month)

To prepare sufficient funds for this You can increase all potential losses you may have to bear by:

  1. Set the price of gold when you open a position.
  2. Set the price support level.
  3. Set the trading volume (if using XAU/USD).
  4. Subtract point 1 from point 2.
  5. Multiply the result of subtraction in point 4 by 100 times the trading volume (if using XAU/USD).

For example, if you are trading gold with the system sum:

  1. You open a position to buy gold at a price of 1700 USD.
  2. You estimate the support level at 1,400 USD.
  3. You open a position with a volume of 0.1 lots, so 1 pip = 0.1 dollars.
  4. 1700-1,400 = 300.
  5. 300 x 100 x 0.1 = 3000

So the money you need to prepare at least 3000$

For example, if you are trading gold with the system dollar cost average:

  1. You open a position to buy gold at prices of 1,700 USD, 1,600 USD and 1,500 USD.
  2. You estimate the support level at 1,400 USD.
  3. You open a position with a volume of 0.1 lots, so 1 pip = 0.1 dollars.
  4. a. 1,700-1,400 = 300.
    b. 1,600-1,400 = 200.
    c. 1500-1400 = 100
  1. (300+200+100) x 100 x 0.1 = 6000

Therefore, the funds you need to prepare at least 6000$. Please note that this funds does not include spread and swap fees. and other fees that you have to pay gold investment.

4. Know how to trade and fees

No less important elements in gold trading are methods and costs. There are many gold trading methods that you can try. From investing in bullion to trading XAU/USD, each method has its own cost component.

Buying Antam gold online, for example, has shipping costs and costs incurred due to the difference between the purchase price and the selling price. Of course, these two costs are non-existent. If you are trading by buying XAU/USD

5. Modeling

to define:

  1. When should you start trading gold?
  2. How much profit and loss can occur over a period of time?
  3. How much money do you need to prepare?
  4. What is the potential profit and loss if you use a dollar cost averaging system with different support values ​​every day?
  5. Estimate the cause of the change in gold prices in the past year.

You can try calculating the gold price (model) with the price of this tool over the past few years. You can perform this modeling process only with Microsoft Excel or other spreadsheet applications.

Modeling is different from retrospective testing. Although both use historical price information. Backtesting is used to test trading strategies using technical indicators. The result is how and how profitable technical indicators are. Modeling, on the other hand, is used to test trading strategies using fundamental analysis to answer the questions above.

You can model Because now you can download raw data on world gold prices up to 1970 on the internet. for how to do You can see the methods used by reputable traders. Ryan Filbert in one of his videos..

The above 5 methods you can do to trade gold in different ways. It is well known that gold trading can be done in several ways. Since investing in gold bars Buying Antam gold jewelry and selling it again at the right time. to gold trading by trading XAU/USD

Each method definitely has its own advantages and disadvantages. However, you can use the above 5 methods for profitable gold trading.


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