Why Gold Is A Good Trading Option For Day Traders

by Pam on July 6, 2016

Forex refers to an open, global market that allows the trading of various forms of currencies against one another. The Forex market is also a place where consumers can trade both local and foreign currencies with the purpose of making profits as the market moves up and down, sometimes hourly. Depending upon the currencies selected, Forex can be an extremely effective and profitable investment for those with the know-how or willingness to study and understand the market and the concept of supply and demand. Gold trading on the other hand, while not Forex exactly, is still a form of trading in an OTC (over the counter) market, but instead focuses on precious metals trading.

Why is Trading Gold So Popular?

Gold is a globally recognized form of currency, and with its common usage and tremendous value as a precious metal it allows for consumers to profit greatly from it –  given the right time and decisions on the investors part.

Gold is influenced by both economic and political changes, standings, and unique changing values as the markets rise and fall, as this also causes other precious metals to fluctuate in value or trading popularity.

How Do Day Traders Profit from Trading Gold?

First, it’s important to understand the concept of what a “day trader” is. Typically, a day trader is a type of stock trader, or for example Forex investor, that focuses his or her investments and anticipated “calls” (prediction for specific commodity rising or falling) on day to day predictions. While called a “day trader”, it’s worth understanding that many of these investors (or firms) are doing this part-time or full-time, commonly “daily” – hence the term “day-trader”. Investors also have the option of investing their money into a stock-brokerage firm that will either offer support, resources, and tools to assist an investor in profiting off the stock markets, or, will do the investing and all the work for you at a certain percentage or service-fee.

Traders that focus their efforts on commodities such as precious metals like gold, choose this investment product and angle in particular because it so frequently fluctuates in value – either in or against one’s favour.

Those who trade gold focus on three concepts: volume, trend intensity, and polarity that may or may not impact gold’s value. Professionals and independent traders benefit from trading gold through firms or independent on the open market options by focusing on inflation, deflation, supply, and demand. Some investors profit from trading gold by being long-term investors, or by investing some of their life savings into gold for the long term.

The trending value and investment of gold in this instance is typically less dangerous, as it’s expected to go up or higher than it often dips at times during economic changes or crisis. Some firms offer “gold-contract” plans where you can diversify your gold trading options by selecting various short-term or long-term quantities, such as 100-Oz, 50-Oz, or 10-Oz micro contracts. Ultimately, both experienced and day traders alike can benefit greatly by studying, understanding, and investing at the right times, as well as learning when to walk away with their profits.

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