Precious Metals

Precious Metals

Monday, 25 January 2010

Trading Metals 101

Nowadays, Trading Metals are one of the hottest topics in Trading Metals Future Markets; it is obvious that investors and traders want to get into and participate in the Precious Metals Market and buy Metals – and why not? The Prices of Gold keep continuing to move higher in the uncertain economic times we are in; the Prices of Gold are fluctuating due to the economic status. When the crisis passed by, the Prices of Gold seem to be stable, but there are still some changes in Metals Markets. In addition, investors and traders seem to be inclined to invest their money into the Precious Metals Futures whether it is a hedge against inflation, or a speculative play. However, you should remember that you only have to use you money that you can afford to lose or within your means when the Precious Metals Futures Markets can quickly go against you in these volatile times.

“Trading the Precious Metals Futures there is a price in USD, buy limits- stops, and sell limits-stops.” Futures Markets mean you have to bear your own risks and losses when trading Precious Metals; you trade these Precious Metals Futures month in advance and they will expire at the end of their trading month. “For instance, say we are headed into March right now, the next available Precious Metals Futures contract would be April, 1 month in advance and would expire at the end of March. Also in Precious Metals Futures if you were to buy April Gold and hold it until expiration, then you would be forced to take delivery from the seller who sold you the specific contract.” That is why when trading Precious Metals, you must have a good understanding about Metals Futures Markets and especially, get the up-to-date information about the Prices of Metals in Future. However, when signing the agreement, do not just think that you can get out of this binding agreement because you cannot, as there will be the exact amount of Gold that you paid for at your doorstep, and a hefty bill. Do not worry however as 90% of the Precious Metals Futures Markets liquidate before delivery can happen. “Precious Metals Futures Market is a place to hedge & speculate."

When reaching the agreements of contracts, you can also sell Gold contracts without having to “borrow” contracts from others like you see in the equity markets. This can explain why all Futures accounts are margin accounts. In addition, as for margin, because there is substantially less margin to put up, you can have more leverage trading in a Futures account…This can be understood that usually the standard deposit is around 10 percent, so you can essentially control 100 percent of the contract just by putting 10 percent down. With that great advantage comes great risk, so you have to take the good with the bad.

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