It is not a secret that gold has not lost its reputation as a valuable mineral over the course of history. You might have come across a gold necklace or a ring even, and have seen how much it costs. If you’re someone who mines gold or someone who creates crafts made of this shiny yellow metal (which chances are you are not, but then if you are, then good for you), then you’re a consumer of such products. However, if we tell you that you can also be an active participant – and not just be a passive consumer – and be able to take advantage of profit opportunities provided by the gold market, would that then interest you? If it does, then better read the rest of this article.
More often than not, commodities are like any other raw material, but that they are being traded in the marketplace. These raw materials then undergo further processing to create more end-products for the public’s consumption. Since the consuming public this constant demand for such products – in this case gold and those that are made of gold – then this causes the price to continuously fluctuate because of the shifting demand-supply dynamics.
We have learned that gold’s value has persisted throughout history. Before the advent of societies using paper currencies (fiat currencies), gold was the means of exchange that was being used. Even today if there are some signs that the financial markets experience some kind of extreme volatility (distressed or extreme emotions caused by uncertainty), the gold market is being seen by traders as a safe haven, and thus they buy gold. This wide participation among traders creates ample volatility and liquidity to provide profit opportunities for those who trade gold.
Gold traders can participate by buying and selling either spot contracts or futures contracts. Spot contracts are those whose prices reflect that of gold’s current market price. Futures contracts, on the other hand, are those whose prices which buyers are willing to pay for with a delivery date that is set in the future. Do note however that the price of the futures contract is never a guarantee that gold’s price will reach that level once the agreed-upon date has arrived. These types of contracts are being used as hedges or avenues for speculation.
Contracts for differences or CFDs are types of derivatives. You may wonder what derivatives are. They are also financial instruments but whose prices are being derived from the prices of their base assets (in this case, the price of gold). CFD involves a process where the difference between the closing and opening prices of the contract is to be settled in cash. It is an agreement to exchange the valuation difference between the contract’s price when it was opened and once it was closed. Traders tend to find these instruments more efficient in terms of cost and time; because aside from cash, no other entity is being exchanged. When compared to other asset classes: in the case of stocks, wherein stock certificates are being transferred, or in the cases of some commodities wherein actual physical goods could be included in the exchange.
These CFD instruments act not only as means for diversification or managing risk, but also to speculate on the likely direction of the price action.
We’re pretty sure that the introduction caught your interest as you’re still reading this part. In order to have a hands-on approach and understand the theories much better, do check out the platform of broker XM and create an account right this instant. The link to their platform is: https://www.xm.com.
What is XM?
XM is one of the well-known and well-respected names in this industry. They have received numerous accolades and recognition from their peers and award-giving bodies over the course of several years. The company was founded back in 2009, and since then has built its reach and client-base to over 2.5 million (which will soon further increase as soon as you get on board). Furthermore, they are proud to mention that over 2.4 billion trades have been performed on their platform without any instance of rejected trades or requotes that happened. That demonstrates stability and consistency. The company is dedicated in its vision of providing fairness, dependability, and trustworthiness in all its undertakings.
That vision is further enforced because they are regulated by different governing bodies, which will depend on where their clients are located; thus ensuring that the service that they provide you is of the utmost quality. The aforementioned regulatory bodies include the following: Cyprus Securities and Exchange Commission (CySec), International Financial Services Commission (IFSC), Financial Conduct Authority, Australian Securities and Investment Commission, and the Dubai Financial Services Authority (DFSA). All of their clients, which will soon include you, are offered equitable and impartial trading conditions regardless of what your account type is.
XM offers you several choices – depending on your preference. From their wide array of available financial instruments (commodities, forex pairs, CFDs, indices, stocks, precious metals, and energies) to the different modes of platform that could be made available to you. The platform applications that they offer include but are not limited to the following: MT4 for PC, MT4 Multiterminal, MT4 for WebTrader, MT4 for Ipad, MT4 for Android, MT5 for PC, and MT5 for WebTrader. Moreover, they make it a priority to keep you and their other clients satisfied when it comes to looking after your interests. That is evident in them prioritizing lessons to make sure that you have a proper background and also them providing a 24×5 customer service team team which could be reached via email, live chat, or phone.
Next up is that we will look into the different features in more detail, both the pros and the cons alike.
Let us look further into the different kinds of platforms that XM offers you. These aforementioned platforms could generally be classified into two kinds: the downloadable MetaTrader software and the webplatform provided by XM (although it also uses MetaTrader technology, there’s no need to download and install). This makes them distinctive among other service providers who usually just provide the webplatform. You might find the layout a bit complicated upon initially logging in as it contains more detailed price data and tools that you can use for your analysis and execution. However, you will eventually be familiar with the platform after about a couple of log-ins. MetaTrader also provides another feature that offers you a competitive advantage over fellow traders, and that is trading bots (ExpertAdvisor). This function will enable you to automate your processes and execution – of course once you already have a tested system in place.
The whole process of registering for an account, depositing funds, analyzing price data, executing a trade, and withdrawing your money is a pretty simple and direct process. However, it only provides one option of registering for an your account – and that is via the email registration process. Other brokers provide another option to register via an existing Facebook or Google account. Although that limitation may seem inconvenient at first, if you’d look at it from a security perspective it actually is advantageous as you can be assured that your trading log-in credentials is only specific for that platform and not shared with other social media applications. Furthermore, XM also provides you a demo account feature. This is a good feature to have for you to practice your strategies and trade execution before risking your hard-earned money.
Upon registration, you will be provided a dedicated ID for logging in (you will be setting up your own password as well). Once you’ve logged in, the default page would be https://my.xm.com/member. This page shows your account details and links to the other areas like: deposit, withdrawal, research, etc. Once you’ve decided that you will be trading, you may click on the “Platforms” link. In this article, we shall be discussing only the features of the webplatform. You may now click MT5 WebTrader. And then the WebTrader 5 window would pop up.
Once you’re on that screen, you will find that the main pane contains the price chart and the list of tradable financial instruments is on the left pane. The default list only contains forex pairs; for you to add gold CFD, you need to right-click the symbols list section then click “symbols”. Found under CFDs, please select Spot Metals then choose Gold.
Pros and Cons
The MetaTrader application provides you plenty of charting tools to choose from, as it is primarily designed for those who prefer technical analysis (or the analysis of price action to speculate on price direction). And also it has the trading bots feature (ExpertAdvisor) to help you automate your trading actions. Please use this function once you’ve already created a tested system for your trades. Another testament to XM’s innovation is that it has its own proprietary strategies that you may be able to avail of.
Another benefit of XM is that it offers competitive bid-ask spreads in order for you to not be greatly affected once the markets turn very volatile and illiquid. XM offers stop loss and take profit orders, as well.
The platform’s layout may seem to be complicated to use at first, because it might have been designed for those who prefer technical analysis (price action analysis); but you will soon adjust to that. Furthermore, the countries that XM offers its services to is still somehow limited, as it does not offer its services to select countries, namely: Israel, US, and Canada.
XM has your best interests in mind, as evident in it providing you the proper educational training before you start risking your hard-earned money. They have lots of educational materials and webinars that help guide you along the way. They also have this research section which contains tutorial videos, news, trade ideas, and an economic calendar which gives you information that you could use in your trading process.
How to trade gold CFDs using XM
XM’s platform, once you’ve gotten familiarized with it, is pretty much loaded with several tools which you will find to be useful once you are executing your trades. Please perform the necessary analysis before performing your trades. Upon double-clicking gold on the left pane, you will see that a new window pops up. The following data need to be filled:
1. Your order’s volume.
2. If the trade is a “market execution” order type: Select if you’ll buy (by market) or sell (by market).
3. If the trade is a “pending” order type: Place the price value that will automatically execute your trade. Then select which type of procedure it will be: will it be of a buy limit variety or is it a sell limit? Then key in the expiration of your order.
4. Fill in your stop loss order.
5. Fill in your take profit order.
Interested to Trade Gold?
The best part?
You need all the advantage you can get over fellow traders having the same profit goals in mind. XM platform offers you that, and then more. Register for an account right this instant so that you can start your journey trading the gold market as soon as possible.
It is very important to manage your risk at all times.
FCA, ASIC, CySEC