Five top tips for trading gold
1. Plan your trading
Gold tends to elicit a strong emotional reaction in traders, leading them to place far too much on a single trade or add to a losing position. Remove this from the equation and try to think of the commodity only in terms of price movements. Develop a trading plan with a set risk-reward ratio, and stick to it.
2. Analyse the market
Use charts to get an idea of how gold behaves over different timeframes. Backtest your strategies on historical data to see how they’d pan out. Look for patterns, wait for breakouts before trading, and trade with the trend. You can compare up to four different timeframes at once with the charts in the IG Trading platform, and get free trading signals to help you make your call.
3. Learn what moves gold
While gold tends not to be as affected by political and economic events as some other markets, it has its own price drivers that you’ll need to watch when trading. You can read about these below, or learn more by watching our video on why gold is valuable?
4. Trade mining stocks
Spread betting or trading CFDs on the share price of companies that mine gold are both great ways to gain indirect exposure to gold. Share prices can sometimes be good value compared to the gold price itself, and are obviously more affected by economic events and company announcements. Keep an eye on news and fundamentals to help inform your trades.
5. Consider a gold ETF
You can use a leveraged gold exchange traded fund (ETF) to deliver amplified results against the metal’s price movements. For example, a double gold ETF will attempt to double any move that spot gold makes, and an inverse gold ETF offers another way of shorting the gold price. You can also use ETFs to gain exposure in more than just bullion price, with some funds including mining stocks in their 'basket'.1