The Advantages and the Disadvantages of the Gold Trading Essay
The Advantages and the Disadvantages of the Gold Trading, 490 words essay example
Many of the investors choose to work in the gold market because they consider it a less volatile product so it is ideal for the investments by the medium and the long term. With the gold you can make the trade's prices in varied forms of the investment such as the futures markets because the investor only needs to invest only a part of the capital needed to have a position in the market.
The gold is a trading with a market that is growing every day, among the advantages of working with these types of products is
It has a fewer risks than trading with other instruments as long as a suitable derivative, chosen for example the future contracts.
The investments in gold are considered reliable because of the price of the instrument that it is not affected by the economic conditions that affect other instruments such as the oil. With a panorama filled with uncertainty about the global economy where the stocks go up and down as often the gold considered a safe product.
Using the appropriate trading strategy you can make the big profits, speculating with the price of the gold, as long as the operator is agile to predict the future changes.
The futures on operating the gold the investors that are interested in this market should consider this type of gold based contracts that are a product of zero-sum. Therefore, the trader should take into account that at each position must be a purchase that will offset the sales in the case of the commercial companies that have the short positions and have profits down and while they move to the upside they will be lost.
Recently, the speculators have created an attractive market for the gold. These speculators used that success in the gold futures contract that is based on the changes in the market for this metal and create contracts that are based on the rise and the fall.
A trader can work with a future contract to provide the liquidity considering the price of action in the real time. The advantage is that it not only requires a very significant percentage of the capital to open the contract, but the highly leveraged transactions with the gold leaves a path on the possibility that the investor may lose what they have invested or even a higher figure.
The gold can also be sold directly on the spot market, which is the commodity market whose transactions are made in cash and the product is delivered immediately where in a relatively is a short time. In this market it is also known as the cash market or the physical market.
This market differs from the future because the latter can be affected by the storage costs and the price volatility. While in the spot risks they are related to supply and demand over time, the operation which makes the prices be more volatile when is done.