As a commodity trading market, precious metals, gold, and silver in particular, provide a unique opportunity for investors to profit in the daily ups and downs of prices. Both gold and silver, with their long standing reputation as safe haven assets, are often in high demand in times of economic uncertainty. You must know how to trade precious metals if you are new to the precious metal trading field.
The key to starting to trade gold and silver is to understand the things that move prices. Global economic events, inflation, the rate of interest, and even geopolitical tensions affect both metals very much. For instance, when the economy slows down or inflation rises, people often want more gold because it’s a store of wealth. As a precious metal, silver also has industrial uses, so its price is not as stable as you might think. Being aware of what the market is doing and how the market is affected by major world events allows you to precisely predict the shifts in prices, making for better, more solid trading decisions.
So to trade gold and silver, you need a reliable trading platform. The user-friendly interface together with the advanced charting tools make MetaTrader 4 something that many traders use for trading. By using this platform, you can analyze market trends, create alerts and make trades in a smooth manner. In addition, a good platform will also give you plenty of order types, such as stop loss and take profit orders, to help you control your risk. One of the things you’ll want to make sure of when selecting a trading platform is that it supports the typical metals that you’d like to trade and that it provides data that’s accurate and up to date.
Now, once you have your platform up and running, it’s time to create a trading strategy. Other traders that ‘day trade’ might target shorter time frames, seizing on short term price movement during the day. This requires quick decision making, and constant, careful market monitoring. For the other braves, then, the choice is long term trading as they hold positions for weeks or months to make the best use of massive price movements. The strategy should be chosen in a way that fits your risk tolerance and trading goals. And of course, gold and silver are both volatile so don’t go into your trades randomly.
There’s no better way to become a better trader than to combine both technical and fundamental analysis. Technical analysis means taking a look at price charts and indicators in order to try and discover trends, and possible buy / sell points. There are common tools moving averages, relative strength index (RSI) and support and resistance levels. However, fundamental analysis includes looking at the economic fundamentals that drive gold and silver prices like inflation numbers, interest rates, and geopolitical mischief. Combining both should improve the accuracy of your precious metals market trading.
Precious metals trading is no different and risk management is very important. Gold and silver can be volatile, and they are capable of making large swings in price, so it’s also possible to take major losses. Setting stop loss orders is one of the most effective risk managing ways. In case the market works against you, these orders will automatically close your position, preventing further losses. Avoid risking too much on one trade. It helps you keep your risk in check so you won’t break your account with some unexpected large loss.
The precious metals market is volatile and prices can shift very quickly. You should therefore keep a close ear on the market in order to stay on top of the trends so that you can adjust your positions accordingly. Dozens of traders use real-time price alerts to let them know when the prices are moving. You can also stay updated on economic news and events, to make better decisions. For example, if there is an unknown economic report or a geopolitical fear, it can have an instant impact on the gold and silver prices.
Successful trading gold and silver requires patience and discipline. The market isn’t predictable; you should not let the emotions rule your decision. Trade to your trading plan and eschew chasing short term gains. By being patient and disciplined, you stand a much better chance in precious metals trading.
Following these tips is the best way to understand the tricks and tips of silver and gold trading. Regardless of whether you are trading to gain short term profits or investing your hard earned money in the metal for the long term, to be successful in precious metals trading, you need to be able to understand the market, make use of proper tools and manage your trading risk.