Let’s dig deeper into the Next Instrument, The Precious Metal.
WHAT IS PRECIOUS METAL?
Trading CFDs on precious metals such as gold and silver without the need to buy physical metals.
Savvy investors understand that metals are a great way to diversify a portfolio and hedge against inflation. They provide low or negative correlation to other asset classes, so by adding them to your portfolio, you can reduce volatility and risk.
Gold and Silver are characteristically limited in supply, which means that they tend to be of higher value. Where Gold is used as the main safe-haven asset, Silver is typically used in industrial production. Therefore, it’s more susceptible to price fluctuations from changes in business conditions.
Traders tend to use precious metals as ‘safe-haven’ assets which become more tradable as economic developments and political unrest caused increased volatility across other markets.
WHY TRADE METAL?
Trading spot metals is considered a safe haven investment, especially at times of political instability and economic uncertainty.
Precious metals are highly popular as an emerging asset class among traders, who wish to take advantage of a more significant and well-balanced trading portfolio.
Hedging opportunities for metal assets creates significant potential in every liquid market, with investors gaining more exposure.
Precious metals have intrinsic value and no credit risk.
HOW TO LEARN METAL TRADING?
There are many ways to learn metal trading. Most people who start on the journey usually use one of these:
WHY TRADE METAL WITH DCFX?
- Trusted and Licensed
- Innovative Technology: WebTrader, Mobile, Desktop, MetaTrader4
- Access to Gold & Silver
- Many prizes with point rewards and referral systems
- Leverage up to 100:1
- Spreads start from 1 pip
- Fund Safety through Segregated Account
HOW MUCH MONEY IS NEEDED TO START?
To join DCFX, you only need US$200 and you can start your trading. To start trading metal, you’ll need to make sure there is enough capital in your trading account. This means that your required capital can be based on your goals and trading style, but it is often suggested that traders shouldn’t risk more than 1% of their account on each trade.
For example, if your account contains $1,000, then you may decide not to risk more than $10 on a single trade.
WHY CHOOSE PRECIOUS METAL?
Precious metal or gold, in particular, has always been associated with monetary wealth since ancient times and tends to hold their value over long periods of time. Thus, providing a long-term safe haven for commodity traders.
MARKET OPENING TIMES
Metals is open 24-hours access to trade Gold and Silver, 5 days a week (the markets close over the weekend).
WHAT DO I NEED TO START METAL TRADING?
Once you have established how much capital you have available, you will then need to start preparing the rest of your forex trading plan, such as the time you are willing to commit to trading, researching which markets you want to trade, and your risk management strategy and your trading strategy.
CHOOSE REGULATED BROKER
- Without a Broker, you’d never be able to get access to the interbank market as you need a really big capital required to do so. Your broker actually has this capital requirement and so can place the trade on your behalf.
- A regulated broker however is not able to offer such high leverage to their clients and will offer you leverage that’s far more realistic in terms of appropriate risk to reward ratio.
- Moreover, a regulated broker should be offering clients Negative Balance Protection. This means that should you be trading, and the market moves against you (or gaps), then you’re protected from generating a negative balance. This ensures that you’ll never lose more than your original investment.
- Finally, regulated brokers also protect their clients by always having ‘segregated client accounts. These special accounts hold Client funds separately from those of the broker, ensuring that your broker can’t use your funds for other purposes.
LEARN HOW THE MARKET WORKS
Buying and selling precious metals doesn’t require you to buy or sell the physical product. You’re simply speculating on the changes in price, just like you would with other financial derivatives.
- Price drivers for precious metals, however, are inversely different from other types of financial instruments. Where stocks and shares may see a decrease in value following political unrest or war, precious metals see an influx of investment, driving their prices higher.
- Factors that usually affect precious metal prices are supply and demand, national and global economic trends, inflation, USD strength, interest rates, government policy, technology, and more.
OPEN ACCOUNT AND PLAN
If you want to trade metal, you’ll need an account with a leveraged trading provider. You can open a DCFX account in minutes, and there’s no obligation to add funds until you want to place a trade.
Building a trading plan is particularly important if you’re new to the markets.
A trading plan helps take the emotion out of your decision-making, as well as provides some structure for when you open and close your positions. Use your favored technical analysis tools on the markets you want to trade and decide what your first trade should be.
BUILD A TRADING PLAN
There are three main parts you should consider:
- Time Frame
Choosing a time frame according to your style is really important. Being a scalper will choose between 1 and 15 minutes. Being a Day Trader will choose a 4-hour chart. So, to make this decision, you’ll need to ask yourself: “how long do I want to keep my trades open?“
- Trading Opportunity Frequency
The next question is “how many times do I want to be opening and closing trades?”
If you’re looking to be opening a larger number of trades, then you would likely be more suited to scalping where you’ll be opening a higher frequency of small trades or Spending less time analyzing the charts by using a trading strategy with longer time frames and larger positions would be more suited to you.
- Day Trading
Day trading is strictly conducted within the same trading day. This means that all the positions you open will be closed before the market does at the end of that day. The timeframes that traders tend to use will range from really short-term (within minutes) or over the course of a few hours.
- Hedging Forex Strategy
This strategy is usually used in conjunction with other assets.
Commonly used to explain the process of getting small profits from a high frequency of small trades, scalping is a strategy conducted over very short time frames, generally on time frames between 1 and 3 minutes.
OPEN, MONITOR, AND CLOSE THE FIRST POSITION
Once you have chosen your platform, you can start trading.
Just open the deal ticket for your chosen market, and you’ll see both a buy and a selling price listed.
Decide the size of your position and add any stops or limits that will close your trade once it hits a certain level. You can monitor the profit/loss of your position in the ‘open positions’ section of the dealing platform.
Once you’ve decided it’s time to close your position, just make the opposite trade to when you opened it.
TRADE WHEREVER YOU ARE
Our trading platforms can provide you with a smart and faster way to trade forex. You can choose to trade via the DCFX trading platform in:
Each of our forex trading platforms can be personalized to suit your trading style and preferences, with personalized alerts, interactive charts, and risk management tools.