Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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5 Tips for Trading Gold (XAU/USD)

With the continuous rise in international gold prices, more and more investors have begun to flock towards the gold trading market. However, investors ought to understand that there are certain risks in all investments, and they need to be cautious. Investors must have specific investment knowledge to capitalise on gold trends and remain successful in this market.

 

ATFX-what-affect-gold-price

 

Some crucial pointers to understanding and trading gold trends

1. Consider the exchange rate

When the domestic currency appreciates, people can buy relatively cheap gold products from abroad because, during such times, the gold prices in the home country may not fluctuate too much.  Still, this does not mean that the value of gold itself will fall correspondingly. Instead, a decline may result from changes in the exchange rate of the local currency against foreign currencies. Therefore, while investing in gold, you also need to have a certain amount of forex knowledge. Otherwise, you could act in a rash and incur losses.

 

2. Buy carefully

Gold is a product suitable for medium to long-term investment, so it is difficult for investors to see substantial changes in the short-term gold trends and prices, disregarding any spikes. When the gold price rises sharply, many investors will actively buy gold, thinking it will bring them quick profits. But in fact, the main advantage associated with gold is long-term risk avoidance, so the rate of return on gold investments is relatively low. Therefore, the proportion of personal investments in gold should not be too high, and investors need to be cautious when trading gold.

 

3. Don't over-leverage when you lose money

Investors tend to panic after opening a gold trade if the gold trend suddenly reverses and heads in the opposite direction. Many investors will want to add to their losing position to minimise their losses. Such transactions are pretty dangerous since you risk compounding your losses. If gold prices have risen for a while, they may have topped by the time you are buying. Therefore, If the price of gold does not continue rising and starts falling after you buy, the best course of action is to cut your losses instead of opening new trades.

 

4. Portfolio investment

Gold prices often trend in the opposite direction to other investment products, so adding an appropriate portion of gold to your investment portfolio can diversify your risk exposure to a great extent. Gold can effectively protect you in case of a sharp decline in the value of your other assets while remaining stable when the value of your assets rises.

Buy gold in batches. From a strategic point of view, investors should follow the rising trend of gold by placing orders in one direction and adding to their position on pullbacks as gold prices keep rising.  Therefore, it is necessary to buy in batches so that you can get better overall prices and wait until the price trend rises again and pulls back, providing another buying opportunity. 

 

ATFX-gold-market-trading-hour

 

5. Short-term trading needs to be cautious

When short-term traders are trading gold,  they usually want to get in quickly, make a profit and get out just as fast. However, the result of rushed trading is usually the opposite, as traders are more likely to incur losses than make a profit. Investing in gold requires a specific set of analytical skills acquired over time.  Gold price trends change relatively slowly, with minor fluctuations. So if you want to make a profit, you need to wait patiently for gold prices to appreciate.

The trend in international gold prices is closely related to the US dollar. Therefore, the factors affecting the US dollar’s price trends also help analyze the gold price trends. In the Internet era, online gold trading is very convenient and safe, but investors must choose formal channels for gold investment. Learn more trading strategies and get to know more about gold trading.


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Last Updated: 21/03/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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