Trade Gold Like a Pro: Strategies for Successful Gold Trading
by Fintech News Philippines November 29, 2023Gold has long been an attractive investment for Filipinos looking to grow their money. While buying physical gold like jewelry or bullion is common, actively trading gold contracts offers more flexibility and profit potential if done properly. Here are some tips for trading gold successfully as a beginner in the Philippines.
Photo by Michael Steinberg
Why Invest in Gold?
Gold has intrinsic qualities that make it an ideal safe haven investment during times of economic uncertainty. Gold has a limited supply and cannot be easily debased, unlike fiat currencies which face inflationary pressures. Its role as a store of value has stood the test of time over thousands of years. Gold prices often move independently of volatile stock markets as well. With factors like government instability, falling currencies, deflation, and other macroeconomic risks, gold provides hedging and stability in a well-balanced portfolio.
Investors worldwide turn to gold in every market crash. Gold’s liquidity also ensures it can be converted to cash quickly. For these reasons, gold remains a trusted hard asset to mitigate risk.
Choose a Regulated Broker
Make sure to pick a broker licensed with the Securities and Exchange Commission in the Philippines that offers gold trading. Ideally, they should provide a user-friendly trading platform, market analysis tools, competitive spreads, and strong customer support for customers who want to trade gold.
Learn Market Analysis Techniques
Like with any trading, good gold trading relies heavily on understanding fundamental and technical analysis. Study price trends, market news and events, supply and demand dynamics, economic indicators like interest rates and inflation, and political events globally that may impact gold’s value as a safe haven. Use charts and indicators to identify potential trade opportunities.
Practice Solid Risk Management
Leverage allows you to trade larger amounts of gold per contract, yet it also amplifies risk exposure. Set stop losses on every trade to control potential losses, only trade amounts you can afford to lose, and avoid overexposing yourself. Beginners should use small position sizes to minimize risk. Also, diversify across asset classes, not just gold.
Take a Long-Term Approach
Gold tends to move based on longer-term macroeconomic forces rather than day-to-day. It often moves up gradually over weeks rather than spikes suddenly in a day, making it less suited to active short-term trades. Use longer timeframes such as daily, weekly or even monthly charts and be prepared to hold positions open for extended periods.
Go Long When Gold is Undervalued
Pay attention to historical price trends – when gold trades 20-30% or more below its recent peak, it may signal an attractive opportunity to take long positions in anticipation of eventual reversion back toward the mean. Be patient and wait for this to play out over months.
Use Stops and Limits
Make sure to use stop loss and take profit limit orders so you automatically exit both winning and losing trades at predetermined price levels. This keeps losses contained if the market moves against you while also locking in profits when you are right so winners can run.
By leveraging the unique properties of gold as an asset, studying proper trading techniques tailored for it, managing risk responsibly and taking a disciplined long-term approach, beginners can find success trading gold in the Philippines while diversifying their investment portfolios.
Featured image credit: Pexels
