Trading the Gold Market in 2010
The gold market was rather impressive in 2009
The gold market was rather impressive in 2009. It started the year at $876 per ounce. It hit $1,226 in November, and whilst down a little, it still closed the year at $1,129.
But which way will gold go in 2010 and how to trade it?
According to Simon Denham of Financial Spreads, In the long-term, for the sellers, the target appears to be $1019.
For those who believe the market will go up the sky remains the limit. Having said that, with the US and UK aiming to rein in Quantitative Easing and with the ECB taking a hard line with Greece the days of easy liquidity may be limited. In this case we might find that Money Supply starts to contract which could well leave Gold high and dry.
In my opinion one of the easiest ways to access the gold market is via Financial Spread Betting. The wide range of markets, including Gold, Oil, Currencies, US and UK shares, make it an interesting trading option.
Of course, any investment provides the opportunity for making a loss. Share trading, buying a house and exchange traded funds can all lead to losses. With spread betting, these losses can be larger than your initial stake.
On the other hand, there are a number of positives. Spread betting is tax free*. You are not actually buying and selling any assets or stock or shares. You are simply speculating on the future price of a financial market.
Also, financial spread betting companies tend not to impose commissions or broker's fees.
And, when the
Gold spread betting market is looking volatile you could always add a Stop Loss Order to your trades. Stop Losses are useful orders and a key risk management tool. When you place a trade you simply set a Stop Loss order as well ie an order to close your trade if the market hits a specified level.
Before you trade though, watch out for your emotions, they can play havoc with your investments. Having a strategy and ensuring you stick to it should help.
Do not try to chase your losses, ie trading when you have just lost in order to recoup your funds. This usually results in poor trades and a further loss of capital.
If you are less familiar with this style of trading, or perhaps you would like to test your theories on specific markets, then some practice may help you understand the risks and rewards as well as the various types of trading order, market volatility etc.
It may be an idea to have a look at a practice or Demo Account. A number of
spread betting firms offer these for free. A Demo Account simply lets you trade the markets with virtual funds. In other words, it is risk free.
Note that spread betting does carry a high level of risk. Before trading, please ensure that spread betting matches your investment objectives. Familiarise yourself with the risks that are involved. Where necessary, seek independent advice.
* Based on UK tax law. If you pay tax in another jurisdiction then tax law may vary.
Trading the Gold Market in 2010
By: Daniel Jones
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