In the previous article, How to Make Money Trading Gold Online, we looked at how we can trade “the yellow metal” online, where I discussed about the importance and how it can be traded. In today’s article I will show you 3 ways how to trade it effectively.
Trading Gold online means that, you will not acquire the physical bullion or gold bar. But have the privilege to make money from the up and down movements of gold price.
There are individuals who make money from “buying cheap and selling high and selling it expensive and buying it back cheap”. This tactics have made people to be wealthy but where the problem is, is trying to know where and when is the right place to buy or sell.
In this article, we will look at the 3 most effective ways to trade gold online and make money from its price movement. You can make this money from where ever you are, what you just need is just a computer (recommended), tablet or phone, a stable internet connection and a broker with a start-up capital.
The broker is the middle man between you and the financial market, where there are millions of people who are willing to either sell to you or buy from you. I recommend people who are interested in trading gold online, to first of all test the river with just one feet than to have lots of expectation and then get drown while struggling to be profitable. This testing the river can be achieved by DEMO TRADING.
What Is Demo Trading?
Remember that one way to make money trading gold online is to buy and sell at deferent price levels, there are times one will “think or believe” that the price of gold will fall or rise only for it to do the exact opposite and this can be devastating and cause emotional break them.
But demo trading can solve all of that to a certain degree, so what is a demo trading?
Demo trading means trading on a “fake, virtual or paper” money, these money are not real but the trading environments and conditions are like that of trading with a real money.
What does this do? This help to prepare traders on how the financial market works and the conditions one will face.
Demo trading are free on all brokers platform but some do have some expiry dates such as 3 months or can get deleted when not in use for a certain period of time.
Ways to Trade Gold Online
There are different ways to trade gold online and we will look at 3 effective ways to do so
Long term trading gold online is one of the safest way to trade gold, this involves buying or selling gold and holding onto it for a longer period of time probably from a few days to weeks or even months. In trading currency this is known a POSITION TRADING.
This mode of trading is better because you will not be bothered about the up and down movements of price, when looking at the historical price movements use either the daily time frame or weekly that depends on how long you plan on holding your trade open.
The picture above is a chart showing the price of gold for a month so if you plan holding your trade for more than 6 months or even a year then this chart is good for you.
Are there any draw down or disadvantage? The only disadvantage is you have to wait for a long time.
Supply And Demand
When there is a constant supply of any commodity, it will make the value to reduce and when there is also demand the value will increase This is just a simple principal in economies but this affect almost all business and the financial market isn’t excluded.
When a lot of investors from around the globe are buying gold it creates a demand for this yellow metal, which fuel its increase in price and the same logic applies to when there is also a high selling rate, the value will drop.
We can profit from this demand (rise) and supply (fall) in gold’s price. But a major question is how do we know when there is demand and when there is supply.
Using the chart below, we can see that there are circle coloured red which denote the area of demand and areas coloured green which indicate the areas of supply.
So the point is to find such area, sell at the peak when there is demand and to buy when there is excessive supply.
I will explain about identifying areas of demand and supply in my next article
Another way which one can trade gold online, is by looking at the short term (period) of the movement of the price of gold. This is the opposite of trading using long term, which I do not recommend, because it is risky than the others ways of trading gold online.
Let me explain how it work, this include looking at time frame such as 5 minutes to 30 minutes and trying to analyse whether the price will go up or down. That is to say whether investors are buying or selling off their various position on gold.
This is risky because one cannot see the larger picture of what is going on the financial market, since we are looking at only a few minutes and keep in mind that within that few minutes a lot can happen, so I wouldn’t recommend you use this method, except you have master it or find it comfortable to use.
Trading gold online is very profitable, especially to those who know how the financial market moves and works. For example when the United State Dollar is weak, gold will rise in value and in price. So you can correlate the USD and gold to be able to analyse the future price of gold.
If you have any question to ask you can do so using the comment box below and I would love to hear from those who are already trading gold before now. Please if you find this article enlightening please share with your friends and family.