When it comes to weight per unit, it depends on the trading market. Generally, gold is expressed in grams, ounces or kilos. We have mentioned that gold is usually quoted in USD. The reason for this is that the USD is the most demanded currency in the world. You will notice that other asset classes such as some commodities and stocks are often quoted in USD.
With this in mind, it doesn't matter if you deposit in another currency as your chosen gold trading broker will simply convert it at the time of trading. Once you have deposited into your account, you will be able to trade gold from the very beginning.
When is the International gold market open?
The global gold trading market is continuously open for business - that's around the clock. If you think about it this way, 24% of the world's gold is traded on the U.S. futures markets, the Shanghai Gold Exchange (SGE), or the London OTC market, with the rest traded on smaller markets. Where one market is closed, another is open.
You will find that different gold trading brokers may offer access to different markets, so you may only be able to trade gold 5 days a week through your particular platform. In the case of eToro, for example, you can trade the asset between 12pm and 10:30am on Mondays and Fridays - with a usual break in the trading day between 11am and 12pm each day.
How can I trade gold?
Now that we've clarified what gold trading is, how it works and how its value is calculated, let's look at the different ways you can trade it online.
Gold trading: CFDs
Gold trading with contracts for difference (CFDs) is considered the main market for online trading. If you like the sound of being able to buy and sell gold without actually having to take ownership of the physical asset, then gold trading via CFDs might be right for you.
Let's explain a little further. As mentioned earlier, you don't own the physical asset when you trade gold in the form of CFDs. Instead, gold CFDs track the price fluctuations of the asset - in this scenario, gold. Your job is to place an order correctly based on the value of the gold going up or down - and this is a contract between you and your broker.
Let's give an example of the basics of trading gold with CFDs:
- The price of gold has increased from 1.902.22 to 1.909.21
- This higher price represents an increase of 0.36%
- The gold CFD will reflect this increase
- If the value of gold falls by 0.18%, your gold CFD will reflect this
You should remember advice from trade-exness: "เงื่อนไขของ CFD ทองคําคุณจะพบว่าโบรกเกอร์ส่วนใหญ่ไม่คิดค่าธรรมเนียมมากนักหากมี. นอกจากนี้เราพบว่าแพลตฟอร์มการซื้อขายใน ดาวน์โหลด mt4 exness มักจะให้ลูกค้ากระจายสินทรัพย์ประเภทนี้อย่างแน่นหนาไม่ต้องพูดถึงการใช้ประโยชน์."
"In terms of gold CFDs, you will find that most brokers do not charge much, if any, commission fees. In addition, we find that trading platforms usually offer clients tight spreads on these types of assets, not to mention leverage."
In case you are not aware, leverage gold allows you to trade with larger stakes than you could have otherwise. It is similar to a loan from your broker that you can trade on credit. However, due to ESMA leverage restrictions in the UK and Europe, you are limited to 1:20 (sometimes shown as 20x).
In simple terms, this means that you can trade at 20x your stake. For example, your £100 stake could become £2,000 if you use your maximum leverage for gold trades. When trading gold via CFDs, you may also be able to make profits when the price falls. This can be achieved by "shorting".
We have put together another simple example of a gold CFD trade:
- Suppose your broker values gold at $1,909.21 per ounce.
- However, you believe that the value will go down in a few hours
- You decide to place a sell order for 1,500 USD
- Your prediction was correct - the gold price falls by 2%
- With your sell order over 1,500 USD you have made a profit of 30 USD
If you had opted for the 1:20 leverage offered by the gold trading broker in question, your profit could have increased from 30 USD to 600 USD. However, we cannot stress enough that you should use leverage with caution. While this can improve your profit level, it can also increase your profits.
