Gold – you may have seen this precious metal in different forms at one point or another (i.e. jewelries, coins, etc.).
And if you have been watching some business news, you might have heard the reporter mention it on more than one occasion.
Before we go any further…
Do you also know that you could not limit yourself as a bystander or only as a buyer of gold products; but could also participate in being able to profit from gold price movements as well?
Now that you do, you may proceed with reading the rest of this article.
More often than not…
Commodities are considered to be raw materials that are being traded in and out of the marketplace.
These aforementioned materials are then manufactured to create other end products or goods that could be sold to consumers.
The demand for such products has not receded over time; this is that continuity that is enabling gold’s market price to continuously fluctuate because of the constant flow of supply and demand dynamics.
And here’s an updated graph showing the price of gold from several years ago until today:
Different eras have witnessed that throughout history that mankind and their societies have valued this precious yellow metal.
Even before paper currency came into the picture (this is the fiat currency that we now know of), gold coins were the primary means of exchange.
Thus, this widespread and enduring acceptance of gold’s value in our society, this creates enough liquidity and volatility for traders to be able to profit from – regardless of what the general trend of the market is.
Among the options of market participants are buying and selling either spot or futures contracts.
Spot contracts are those contracts whose prices are that of the current market price of gold.
Whereas futures contracts are those contracts whose prices are the prices that buyers are willing to pay for with a delivery date that is set some time in the future.
Do take note of the fact:
The price of the futures contract is definitely not a guarantee that gold’s price will reach that once the agreed-upon date has already arrived.
These contracts (futures) are instead used as risk-management tools of sorts (hedging) or avenues for speculation.
Here’s an interesting but brief video that discusses the gold markets which we highly suggest that you watch:
CFDs – or contracts for differences – are types of derivative instruments.
These derivatives are also financial instruments, but instead of having stand-alone prices, their prices are dependent on the prices of their base assets (i.e. gold’s market price).
How does it work?
A CFD involves a process wherein the settlement between the opening and closing prices of the contract are to be settled in cash.
Basically, it is an agreement (hence the term contract) to exchange the valuation difference between the price of the contract upon opening, and then its price upon closing.
Traders also find CFD instruments to be more efficient (in terms of time and cost) than other instruments such as trading stocks and commodities. The reason being is that no transfer of entities other than cash is being involved.
In stock trading, shares are being transferred while in some cases of commodities trading, the actual physical goods are being transferred.
Trading CFDs also allow gold market participants to not only speculate what will be the future price of gold, but also as means of diversification for their gold holdings as well.
Trading CFDs allow them to manage their risk through hedging.
How can you actually use this?
You can use all those information that you’ve learned in the introduction part by applying those in the CFD market.
And how will you be able to do that, you may ask?
Fear not, we have your back!
In this article, we’re presenting to you AvaTrade, a brokerage firm which has a suite of platforms where you can trade on this yellow metal.
If you’d like to know more about them in detail, you can read our full review or go ahead and create an account right now in order to start your journey.
What is AvaTrade?
AvaTrade is well-recognized as one of the leading companies in this industry.
That recognition is evidenced by it being made as one of the partners of the Manchester City Football Club.
The company began in 2006, and through time they grew and are now servicing more than 200,000 registered users residing in different areas all over the world (plus you of course, once you have registered).
These traders make more than 2 million trades per month, ensuring that AvaTrade can handle volume and increased activity.
AvaTrade is regulated by various agencies, depending on which country the company is registered.
And that’s not all…
It has licenses in EU, Australia, Japan, South Africa, and the British Virgin Islands – talk about global coverage!
And another thing:
They also have data security and integrity as one of their top priorities as part of their dedication to always think about you and their other clients.
They feature data encryption, have an embedded True-Site identity assurance seal, is WebTrust-compliant, and have implemented a system to prevent identity theft and credit card fraud.
They have segregated your money (client money), from their own funds.
They were also one of the first forex brokers to introduce CFD trading (commodities, indices, and stocks) in their platforms.
Now that’s what innovation is.
Another testament of them providing you great service is the fact that they are providing you a dedicated account manager to look after your needs.
In connection to this:
They also have a customer service team that you could contact via various channels (phone, email, social media, etc.).
Let us further scrutinize the pros and cons of AvaTrade’s features.
Unlike other brokers which offer only one platform (usually WebTrader), AvaTrade has a few choices on which platform you prefer to execute your trades on, and these are the following:
- MetaTrader4/MetaTrader5 application
- AvaTradeGo (their mobile application)
And even though their webplatform may not be as direct and simple to use, as you need to access the MetaTrader interface (either downloading the application or to log-in using a separate set of credentials), it does contain far more detailed data for your analysis, especially when it comes to their price charts.
Since it also has an interface with the MetaTrader software, another advantage that the platform offers is that you eventually could make use of ExpertAdvisor trading bots to automate your trading once you already have a firm grasp of the concepts and how to execute them.
The complete end-to-end procedure in AvaTrade: registering for an account, depositing money, executing your trades, and withdrawing money – is all fairly easy to do.
Let us explain:
When registering for an account, you can do so via a few options: you may register using your email address or you may also register using your existing Facebook or Google account credentials.
That option helps with the convenience of streamlining your credentials.
You are also given the option of creating a demo account first (instead of a live account) for you to practice your analysis first before risking your hard-earned cash trading the market.
Upon logging in to their platform, the default page that would show up is the MyAccount page. The data that show up are your different accounts that were you’ve created (both the demo and the real accounts).
In this portion, we shall discuss the web trading component only:
You then will select which account would you like to log in – with a separate set of credentials (this time to the MetaTrader interface).
You will then be logged into the MetaTrader web interface and you will see that the price chart is on the main pane located on the center and the list of the tradable financial instruments are located on the left pane.
The default instruments that would be shown are the forex pairs; in order to show the Gold CFD instrument, you need to right click on that pane; then select symbols, and then look for CFD-Metals, then select Gold.
Once it has been added, you may now place an order.
To place that order, you may double-click Gold and you will see that the order pop-up window will show up.
There are plenty of financial instruments to choose from in the AvaTrade platform (i.e. lots of forex pairs, CFDs, commodities, cryptocurrencies, etc.).
Pros and Cons
- Variety of useful tools for trading gold
- Automated trading bots allowed
- Can register using Facebook or Google account
- Practice trading gold using demo account
- Takes a couple of sessions to get used to
- No price alerts
Let’s first talk about the pros:
The MetaTrader interface provides its advantages to the AvaTrade platform as it has LOTS of trading tools that you may find helpful in your analysis and trading.
And another thing:
You are also given the option of using ExpertAdvisor (automated trading bots) to help you streamline your trading executions – provided you’re already well-versed with your trading methods.
Now let’s talk about the cons:
The platform is not as simple to navigate around initially, when compared with the platforms of other brokers.
The reason being is that it may be designed for traders who use technical analysis (charting tools).
You will be able to quickly familiarize yourself with the platform after maybe a couple of sessions, then will be able to take advantage of the many advanced features that MetaTrader offer.
Also, there are no price alerts – unfortunately.
AvaTrade prioritizes education.
And that is evident by the materials that they have prepared to help you make informed trading decisions.
Featured topics are:
- Trading for Beginners
- Economic Indicators
- Trading Tutorials Videos
- Forex eBook
The materials could be accessed via this link: www.avatrade.com/education
How to trade gold CFDs using AvaTrade
You will be able to familiarize yourself better with the platform and its advanced features after a couple of visits.
You then will tend to appreciate its features which emphasize on analysis and execution.
Please be reminded to:
Do your analysis BEFORE making your trades.
You can now double-click on Gold from the list of names on the left pane (as we’ve added the Gold CFD instrument earlier).
The trading window will now pop up, and you need to enter the following:
- Order volume.
- If you prefer a market order: Select Type: Market Execution. Click Buy or Sell.
- If you prefer a limit order: Select Type: Pending Order. Enter the value that you would want for your trade to be triggered (either buy limit, sell limit, etc.). Click Place.
- Enter your stop loss order.
- Enter your take profit order.
Interested to Trade Gold?
Why does this matter?
Register with AvaTrade right this instant to take advantage of features (like advanced charting and education) to give you that much needed edge over the other participants in this market.
However, please always remember that:
It is of utmost importance to manage your risk at all times.