Spread trading is another common strategy used by futures traders. The trust holds gold in reserve, and therefore, its value is reflective of the price of gold. For example, one futures contract for gold controls troy ounces , or one brick of gold. Strategies By Investopedia Share. Spread trading combines a long and short position entered at the same time in related futures contracts. In general, spread trading is considered to be less risky than taking an outright futures position. The market may have a wide range, but it must move in increments of at least 10 cents.
5 Tips for Day Trading Gold Futures Now that you have the contract specifications for trading gold futures, here are 5 trading tips for gold futures markets. #1 - Gold futures .
Long and Short Trades
If you buy or sell a futures contract, how many ticks the price moves away from your entry price determines your profit or loss. The amount you need in your account to day trade a gold futures contract will depend on your futures broker. The amount required by your broker to open a day trading position is called Intra-day margin; it varies by broker and is subject to change. If you have a stock trading account, you can trade the price movements in gold.
The trust holds gold in reserve, and therefore, its value is reflective of the price of gold. The trust trades like any stock. The amount you need in your account to day trade a gold ETF depends on the price of the ETF, your leverage and position size. You can also trade Stock Options on these same stocks which require less margin and provide much higher leverage. Do it because you like it. Most day traders I know make an above normal living, they just have a lot more time than most people and love what they do.
Day trading can be done in one to four hours a day. There is no reason to trade more than that. The good news is you can pick the time that works for you, because the market is open for trading 24 hours per day — 5 days per week. The most powerful skill you will ever learn in your life is Safe Day Trading. Mail will not be published required. Notify me of follow-up comments by email. Notify me of new posts by email. Day Trade Gold for Profits. Interested in day trading gold?
Also, the problem with trading long term is that sometimes it takes weeks for price to reach its objective, meaning that your trade is likely to initially move into profit and only to move back into the negative. The wild swings require a lot of patience and a focus on your margins. On the contrary, intraday trading in gold futures, if done right has its own benefits. For starters, you focus is the short term markets. Before we get into the details, it is absolutely essential to once again run through the contract specifications and margin requirements for gold futures.
While this has been covered in the past, the reason for repeating this again is to ensure that even before you trade gold futures, you need to know the contract specifications and margin requirements and other technical details of the contracts by heart. There are many other versions of gold futures contracts including mini sized gold contracts and micro-sized gold contracts. While they definitely require lower margins, the tick size also varies. However, volume of trading in those contracts is essential.
By far the standard gold futures contracts GC is the most popular and well know among the different variations. Now that you have the contract specifications for trading gold futures, here are 5 trading tips for gold futures markets.
Correlation is an important tool for traders in general. What better way than to have two separate assets that are highly correlated that can confirm your bias? The market sentiment plays a big role in gold and yen futures. Likewise, when the risk appetite wanes, investors tend to flock to the safe haven instruments, which appreciates as a result.
The chart below shows gold futures GC and yen futures J6 and it is not hard to see how these two assets tend to be closely correlated. If you want to be even more thorough, you could also look at the Dollar index futures for additional confirmation. However, this is not required as the dollar is the de-facto common currency between gold and yen futures. When you are trading gold futures, no matter what strategy you use, you can always check the same with yen futures as well.
The next chart below shows a 1-hour time frame for gold and yen futures. Notice the inside bar formed on the yen futures, followed by a lower high.
One of the simplest ways is to look at both the charts on a daily or weekly time frame to being with. This helps you to ascertain the long term trend. You can then switch to a 1 hour or 15 minute chart and buy the pullbacks dips in an uptrend or rallies in a downtrend on the lower time frame charts. This method works at the start of a new trend and as the trend progresses; prices are more susceptible to deeper pullbacks.
The next chart below illustrates how you can apply the daily chart's price action to the lower time frame. On the right side of the chart you can see a doji forming near the bottom end of the trend. This was followed by a bullish close above the doji's high at Marking this level on the 1-hour chart, the trade idea is to simply buy the pullback to On the 1-hour you can also see that the previous high or resistance was found at We had two profitable trades here from going long at Multi time frame analysis can scare off a few traders, but it is relatively simple.
Look to the daily chart and ascertain at what stage the trend is in.
Advantages of Futures Contracts
In futures trading, as with other types of trading, you can go long, short or trade the spread. Spread trading is another common strategy used by futures traders. If gold prices rise, the. The 25 strategies in this futures options strategy guide are not intended to provide a complete guide to every possible trading strategy. How to Start Day Trading Gold. So if gold futures are trading at $, then the Gold Trust will trade at approximately $ The trust trades like any stock. The minimum price movement is $, therefore you make or lose $ for each share you own each time the price changes by a penny. Stocks and ETFs are typically traded in share.