Most beginners and intermediate traders when choosing financial instruments for earning are limited to currency pairs. It is easiest to trade through NSBroker, but what exactly to trade, that is the question. Today, Forex brokers offer a significant selection of assets:
- stock indices;
- currency pairs;
- commodity raw materials and other.
It is worth noting that of all the above tools, transactions with currency pairs and cryptocurrencies are the most risky. The fact is that the digital and fiat currency market is decentralized, which makes it difficult to analyze. The key to the pricing of any asset is trading volume. Obtaining accurate information about changes in the mentioned factor is almost impossible, since no large bank or liquidity provider has such information.
ETFs and stock indices should be considered for long-term investments. With the successful preparation of the investment portfolio, this will make it possible to annually profit at the level of 20-30% of capital. This amount is clearly not enough for beginner traders, because few of them have several million free funds.
There remain raw materials, the potential value of which can be relatively easily predicted based on fundamental factors. Today we will talk about ways to successfully trade gold in the OTC Forex market, namely, working with contracts for the difference in prices of this metal. This article provides all the information for novice traders.
Gold Facts Every Trader Should Know
It is important to know that gold is a fossil and non-renewable precious metal. The reserves of open mines are depleted every year, which leads to a constant increase in the value of this asset in the long term. Gold is also a kind of refuge for investor capital. Economic crises always lead to a massive outflow of capital from securities. Fearing ruin amid stock market crash, investors are transferring funds to more reliable assets, one of which is gold. The steady increase in gold prices can be explained by the annual depreciation of fiat money, in other words, inflation. Regardless of the macroeconomic situation, gold always grows in value in the long run. If you decide to try yourself in trading, you should go through NS Broker registration first.
Forex Gold Trading Specifics
When working with this precious metal in the OTC market, it is important to understand that 1 standard lot is 100 troy ounces. XAU – a symbol of gold in the Forex market. Brokers provide traders with the opportunity to earn money on the pricing of this asset through transactions on the XAU / USD pair. The graph displays the cost of 1 ounce of metal in US dollars. If it is 1510.02 USD, therefore, to buy 1 standard lot without leverage, the trader will need 151 002 USD of free funds. Brokers provide for a minimum contract amount of 0.01 from the lot, that is, for the start of gold trading you need to have 1,550 USD (including commissions). Leverage comes to the aid of novice traders, the maximum level of which is on average 1:1000, however, working with such a volume of borrowed funds creates serious trading risks. The optimal level of financial support is 1:100, that is, to open a transaction with a volume of 0.01 lots on a pair of XAU / USD, it will be enough to deposit an amount of more than 20 USD into the account.
When using leverage, it is extremely important to pay attention to the conditions of margin trading. Some companies set Stop Out (forced closing of a transaction with fixing a negative financial result) at the level of 60-70% of the trader’s deposit, others – 20-30%. In addition, do not forget about the rules of money management in financial markets. The risk per transaction should not exceed 5-10%. To follow these standards, you will need to replenish a trading account in the amount of 200 USD.