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Posted on May 30, 2019 at 01:05 PM
Gold ranges an average of 1000 pips daily! What If I told you, it won't take that much to trade gold and show you a safe way to get started? Hop on and let's explore how to trade gold as a Nigerian Forex Trader.
Gold is one of the most sort after metal in the market and this is because it is a very volatile instruments in the Forex market.
So if your analysis is top notch, you may be in for some profit trading Gold!
If you're lookiyng to explore gold trading, here are a few things that you should know:
Gold is domiciled in certain stock exchange markets, so just like the regular currency pairs, it is always available for trading except on major Public holidays when major stock exchanges have to shut down.
Gold is highly volatile and responds to Dollar index, such that when dollar index is falling, gold rises and when dollar index rises gold should fall. On an average Gold ranges 1000 pips daily thus making it a very valuable and profitable metal to trade.
You can either trade gold as Gold spot or XAU/USD in Forex, it largely depends on your equity and how much risk you are willing to take.
Because InstaForex is our broker, this guide will solely inform you based on the trading conditions of InstaForex and it may/may not cost you more to trade gold with any other brokers.
When trading Gold spot in instaForex, take note that it has a spread of 60 pips While XAU/USD does times 5 of the monetary value of Gold spot. I e the same pips that would cost you $60 in Gold spot will cost you $300 in XAU/USD on a standard lot size. (1 InstaForex lot). That is where a gold spot makes you $1/lot, Xau/Usd will make you $5/lot.
For Example: Consider that we take the same trade on gold spot and Xau/Usd with our entry price as 1234.90 while our TP as 1230.90.
The spread is 60 pips, so for 1.00 standard lot size, upon placing the Trade, we will be recording $60 while on a XAU/USD for the same trade, we would be recording $300.
So if our Gold spot trade posts 400pips profit, we make $400, while for the same 400 pips our XAU/USD will be recording $2,000 ($400 x 5). Jackpot!
So what exactly does it take to trade Gold?
Equity: Unlike the physical market, You don’t need a billion dollars to trade gold in Forex,with an equity starting from $100 amplified with a 1:1000 leverage you can trade gold. However, because of the large spread involved versus the capital invested, you may have to stick with 0.01 lot size/volume per trade.
Trading Experience: You must have a good knowledge of technical analysis and a grasp of what fundamentals will affect gold.
Risk: Which of these 2 match up to your risk appetite? Gold spot or XAU/USD? Make up you mind.
Why should you stick to 0.01 Lot/Volume?
You should stick to this lot, because its better to be safe than sorry! Gold is extremely volatile and the spread is 60! You don’t want the spread to eat in more than 50% of your equity already. That’s a crazy way to trade.
Don’t forget that draw downs are expected in a trade, by draw down I means the little reversals below your entry price before they eventually go into profit. (Regardless of your experience, expertise or pair you need to be prepared for this on every trade).
So in summary: here is what to consider when getting started with trading Gold in Forex.
Now you that you know, you should keep your eyes on this instrument from today. If you don’t have up to $100 in your account. You can top up your account by clicking here
Something big is cooking, do you want a share? What if we create a weekly gold signal group, where we post possible entries and exit points at-least once in a week and all you have to do is make a deposit to get in, would you like to join? (Let me know your choice and your suggested deposit for entry in the comment section below).
I’ll look forward to hearing from you.