Commodity trading course: Ways to trade gold
There are four main ways to trade gold online.
For anyone looking to trade gold online, there are a number of ways to make money.
- "Spot" trades involve the use of a daily contract, and you can trade gold in just about any currency you choose, although by far the most important one is the US Dollar, followed by sterling (GBP) and then the euro (EUR).
Contracts for differences – CFDs – are becoming more and more popular. You can sell short to take advantage of a falling gold price, via the use of futures contracts. An alternative (that's very inexpensive but not available in all jurisdictions) is called a Spread Bet - in essence it's identical to a CFD.
Exchange traded funds let you sell short, buy on margin and purchase as little as one share in a gold mining company. They're traded like a stock, so there is no net asset value at the end of each day.
- Contract Options
These allow investors to trade gold, oil and other commodities, currencies, interest rates, bonds and stock indices. You have the option to buy or sell gold at a fixed date. In essence, you get the right - but not the obligation - to buy or sell gold (or whatever you are trading) at a specific price on that date. Options are complex and not for the beginner. Both options and CFDs use futures contracts - rather than spot prices - as the trading medium.
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