easy-forex® Learn Forex Articles Commodities Trading Gold and Silver
Gold and Silver
Online trading in gold is straight forward with
Easy-Forex®. In the Forex market, gold is considered a form of
currency, and so is silver. Online trading in gold is electronic, the same as
other currencies and oil. Gold is traded in a
similar way to other currency pairs.
However there is a difference: gold, silver and other commodities can
only be traded against United States dollars (USD). Prices are always expressed
in terms of the US dollar.
Like foreign currency rates, online trading with gold rates
does not require the "physical" purchase or sale of the real material. You do
not purchase gold that you can hold.
The trading method for gold is
called ‘over the counter’ or OTC. OTC deals are not part of the Stock Exchange
of any country and so the deals are not controlled by the same methods as the
Stock Exchange. OTC trading is performed directly between the seller and the
buyer. No other people or organisations are involved.
OTC trading is the
common form of trading in the Forex market.
Traders can perform day-trading in gold. Day-trading means deals are
usually completed before the close of trading that day. Gold traders usually
hold their position for a short time only, but it is not necessary to complete
the deal within a day. The deal can be extended for two or three days, depending
on how the trader decides to make the deal.
Once a gold day-trading deal
is opened, it can only close in one of three ways:
- The trader ends the deal
- The deal reaches its stop/loss limit
- The date decided for ending is reached
Until one of these three things happens, the deal
continues. When your day-trading gold deal is open, it is renewed automatically
every night at 22:00 GMT, and each time it is renewed, a small charge is made
from your trading account.
Commodity trading online has become much more of an
interesting business endeavor with real time commodity quotes and live charting
services. Internet technology has made the type of commodity trading services
previously reserved for the deep pockets professional trader available to
all.
Generally, as the price of
gold increases, the price of the US dollar falls. This is why investors use
gold trading as a way of balancing their profit and loss against the US dollar.
Also, as gold tends to keep its purchasing power over time, investors may buy
gold to balance the effects of inflation and currency value changes.
The price of gold is measured by its weight. The price
shows how much it costs for one ounce of gold in US dollars.
You can
learn more about gold prices here
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