Trading in gold is easy with Easy-Forex™. In the Forex market, gold is considered a form of currency, and so is silver. Trading in gold is electronic, the same as other currencies. Gold is traded in a similar way to other
currency pairs.
However there is a difference: gold and silver can only be traded against United States dollars (USD). Prices are always expressed in terms of the US dollar.
Like foreign currency rates, 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. 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 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.
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.