68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money
For a long time…
Gold has been known to be a safe-haven for traders and investors alike, especially when extreme volatility hits most of the other financial markets.
It’s interesting to note:
There are still opportunities to profit REGARDLESS of the market conditions!
So should you would want to start to trade gold too? Then kindly proceed on reading the rest of this article.
So here we go:
Commodities are generally raw materials that are being exchanged in the market. These raw materials are then being used to produce more end-products.
Because commodities like gold are continuously being traded in different exchanges globally, their market prices tend to continuously fluctuate based on the perception of the all the buyers and sellers, which comprise the market.
Prices tend to follow the supply-demand dynamics or even the whims of the general consensus of market participants.
Checkout this latest graph showing the price movement of the gold markets:
Gold has seen its value endure throughout history.
Prior to the widespread usage of paper currency (as we know today), coins made of this yellow metal were the ones used for exchange.
Throughout the ages, societies have consistently valued gold, thus preserving its value.
As it is valued by many, this creates more than enough activity and liquidity in trading.
This is providing profit opportunities for gold traders regardless of the general market’s direction.
Gold traders could participate in the market’s activity by buying and selling either spot contracts or futures.
Allow us to explain:
The difference between them is that spot contracts’ price is gold’s current market price, while the latter’s price is the price wherein the buyers are willing to pay for that particular gold contract on a delivery date that’s set sometime in the future.
The futures contract’s price does not guarantee that gold’s price would be able to reach that particular price once the set date has arrived.
Futures are instead used to manage risk (hedging), or to bet on a future price (speculating).
CFDs (Contracts for differences) are kinds of derivatives.
What are derivatives, you inquire?
Derivatives are also financial instruments, but whose prices are being based from the prices of individual assets (as in this case, gold).
Put it this way:
CFD transactions involve the settling in cash the difference between the contract’s opening and closing prices.
Unlike in other markets where there are actual transfers being involved (transfer of shares in the case of stocks or physical goods in the case of commodities), in CFDs there are none.
These are primarily contract transactions, thus making the whole process more efficient and quick (in terms of time and cost).
Now get this:
CFDs also allow gold traders to speculate on the price action of the underlying product (in this case, gold). These traders use CFDs, or other derivatives, to place their bets whether gold’s price would increase or decrease in value.
These CFD instruments also are being used by gold traders for they are presented profit opportunities regardless of the market’s overall direction, as CFDs allow these traders to go long (buying and then selling at higher prices for a profit), or go short (act of selling and then buying them back at lower prices for a profit).
That’s not all…
CFDs enable gold traders to be exposed to far more opportunities and wherein risk is relatively managed in the forms of diversification.
What’s the real story?
We bet that that introduction caught your interest as you’re still reading this part.
Let us introduce this broker as it is one of the best and one of the most innovative in the trading industry: eToro.
If you’d like to know more about this broker in detail, you may click here to read our updated and in-depth review.
What is eToro?
eToro is currently one of the leaders in the currency and CFD trading industry.
They were also the ones who first introduced the social trading platform; and are the leading social trading network provider in the world today.
For more than a decade of dedicated effort, eToro has been a consistent leader in the global Fintech development.
It was founded back in 2007, based on the goal of making trading more accessible to anyone and in any place. The founders aimed to shake up the norm back in those years, and succeeded!
eToro is a fully regulated broker.
This firm is strict in following the rules implemented by the regulatory bodies in the different places where they are operating, namely:
- CySEC (Cyprus Securities and Exchange Commission)
- FCA (Financial Conduct Authority)
- ASIC (Australian Securities and Investments Commission)
What makes this so special?
This is to ensure that they have the best interests of all their clients in mind.
This could also be seen by eToro taking the necessary steps in securing the confidentiality of their clients’ information (always keeping up with the highest standards of cybersecurity), and having their clients’ funds secured in tier 1 European banks.
Do you need more reasons in choosing eToro as your broker in trading Gold CFDs?
Say no more.
Let us discuss the features that this broker provides.
It is evident that the eToro platform is pretty simple and easy to maneuver around and to use for trade execution.
The end-to-end procedure of signing up for an account, depositing money, trade execution, and the subsequent withdrawal of funds are all straightforward to do.
Here’s the deal:
When signing up for an account, aside from having the option of registering their email address, would-be clients could also sign up via their Facebook or Google accounts.
The general layout of their website also shows simplicity and robustness, as the financial instruments that could be traded on their platform are already listed on the main window.
Here’s the thing:
The default list that is being shown is your Watchlist. This is important so that clients could set their focus only on certain financial instruments that they are planning to trade (i.e. gold).
Asset names could be added to or removed from the Watchlist along the way – or even create an additional Watchlist for organization purposes.
Why does this matter?
It matters because to be able to compete against fellow market participants day in and day out, then clients would need their focus throughout the trading process.
Let us say you would like to add gold to your Watchlist.
You could use the search bar (located at the top center), or click add markets (icon could be located once you scroll down to the bottom of the instrument list), and then look for the category of the desired financial instrument (in this case, gold would be under commodities).
We’re not through yet…
The platform has lots of options to choose from (which could suit any need in terms of trend or volatility), namely:
- And the most recent kind – Cryptocurrencies
Pros and Cons
- User-friendly platform with unique social trading features
- Huge community of professional gold traders
- Competitive bid-ask spreads
- Customizable gold price alerts
- Stop loss and take-profit features
- Charting feature not on main page
Let’s first talk about the pros:
Social trading is an area where eToro pioneered in.
When inside the platform, clients may be able to search who are the top performers among eToro clients and may copy the latter’s trades.
In turn, the top performers would also be incentivized for that so it’s a win-win for both parties.
Now consider it this way:
A goal is to leverage the features that are prevalent in social media platforms (for example building a tight and strong social community of traders using the platform to share wisdom and strategies).
It builds on the distinct advantages of a traditional broker platform with that of a social-media platform:
To add value to its clients and to enhance the competitive advantages that its clients enjoy in the challenging world of trading.
The company also offers bid-ask spreads which are competitive in the market.
As a client, you would not be greatly affected by slippages once the markets turn volatile, which happens every so often.
In addition to that:
eToro offers alerts that would be helpful to their clients to be aware of certain price levels even if not monitored actively.
As if that’s not enough…
eToro’s platform also has stop loss and take-profit features.
How can you actually use these?
These are being used to manage the risk of any open trade. The stop-loss is there to ensure that the loss won’t get any bigger if the price action turned adverse.
The take-profit is there to ensure that you could monetize your gains along the way.
Now let’s talk about the cons:
The charting feature could not be seen from the main page. You will have to click the line chart next to the asset’s name or would need to click the gear icon located on the upper right area and click Launch ProCharts.
Why does this matter?
For those who use technicals in their analysis, this added step to access this information might prove to be slightly inconvenient.
This platform has an educational area to help its clients plan their actions better and also better execution of their trades.
Here are the details:
Features include daily market updates, economic calendar, FinTech basics and concepts, and an introduction to social trading.
How to trade gold CFDs using eToro
eToro’s efficient platform features make it easier for you to trade gold CFDs.
As a client, you could simply select “gold” and then click “Trade”. You will be sent to a page wherein there are options to:
- Select either the buy or sell transaction.
- Select the kind of order: market rate or limit order.
- Input the value of your bet.
- Input the leverage that would be used (1x,2x,5x).
- Input a stop loss order.
- Input a take profit order.
Interested to Trade Gold?
We can’t emphasize enough…
Don’t waste any more time and participate now in one of the most enduring and actively traded markets in the world!
Trade gold using eToro’s easy-to-use features and, of course, their social trading feature as well in order to maximize the opportunities provided by the platform!
But always remember:
Keep track and manage risk at all times.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.