Vital Details About Trading Metals

It is essential to understand the nuances of gold and silver CFD trading.

Leverage

You can use leverage when gold trading online. This feature allows you to borrow money from the broker to increase the size of your position.

For example, if you have 50 times leverage, you control $50 for every $1 you invest in your gold (Also known as XAU/USD) position. Leverage is important because it allows you to open a large position with a limited investment. It also exposes you to the possibility of more considerable losses, so proper risk management is necessary.

Brokers usually quote leverage using a ratio. For example, at TMGM, we offer up to 400:1 leverage on gold and 100:1 on silver. You do not necessarily have to use the maximum amount on each trade. However, you can see how this feature can significantly increase the size of your position.

 
Bid/ask spreads

Like all trading instruments, a gold CFD has slightly different buy and sell prices. This gap is known as the bid/ask spread. It constitutes a trading cost and should therefore be as tight as possible.

At TMGM, we use a proprietary aggregation engine to ensure the tightest possible spreads on all our CFDs, including gold and silver. This tool helps keep trading costs down. Our spreads can be as low as 0 pips.

At the same time, we are transparent about our prices. You can see the spreads for each contract, allowing you to add this cost to your trading decisions.

Analysis

You should have the necessary tools to make informed gold CFD trading decisions.

Precious metals trading is unique in that both fundamental analysis and technical analysis can be effective.

Fundamental analysis for gold trading involves looking at economic data via the economic calendar or tracking news reports that could signal uncertainty in major economies. Interest rate announcements, GDP reports for major economies, and natural disasters can all affect gold and silver trading prospects.

You can also look at less-known data, like reports from gold mining companies.

Technical analysis involves looking at the price actions and indicators of gold. Technical traders believe insights about supply and demand, market momentum, and other factors available through charts and graphs. Swing and day traders often use technical tools, while longer-term investors rely on fundamental analysis.