Goldtrades.info - How to Trade Gold

How to trade spot gold (London Gold LLG)?

You should also visit "Gold Trade Basics" before you start investing in spot gold markets.

What you see in your trading account:
(see below trading account)
XAU/USD XAU is the symbol for London Spot Gold Price, on the trading platform you will see XAU/USD, Spot gold price vs US dollars
Bid Price = Sell Price
The price for selling spot gold
Ask Price = Buy Price The price for buying spot gold
Buy Order = Long Order
An order for buying gold as you forecast gold price will go up
Sell Order = Short Order An order for selling gold as you forecast gold price will go down
Open Position = Open Contract Creating an order (long or short)
Close Position = Close Contract
Closing an order, settling an order
Limit Order
Placing a future order with the price you think gold price will reach, can be long or short order
1 Lot Contract
Placing a 1 lot order, means open a position to buying or selling 1 contract.
1 Contract size = 100 ounce of gold
USD1 = 10 pips
In spot gold trading, each 1 lot contract:
each USD1 rise in gold price = USD100 in actual contract value, each 1 pip rise in gold price = USD10 in actual contract value.
Leverage
1 : 85 (depends on current spot gold price)

What you see in your account summary:
( For Example: See below trading account - )
New Balance
Balance in your account
Profit / Loss
Profit and loss during the trading day
Floating Profit/Loss
Profit or loss which is unrealised, ie open position's fluctuating profit or loss that is not settled yet.
Equity Balance
Net available balance in your account (excluding the floating profit/loss amounts and margin requirement)
Margin Requirement = deposit requirement
Required amount of deposit deducted from your account balance to create open positions.
For example: If a Deposit amount of HKD10,000 or USD1282 is required for opening a position of 1 lot. When a 1 lot position is closed, the USD1282 will be added back to Equity Balance.
Effective Margin
Remaining margin amounts available for placing new orders
Call Margin
Required additional margin for maintaining existing opened positions.
Low Price
Daily lowest gold price
High Price
Daily Highest gold price
Bought Lot
Number of bought lot contracts
Sold Lot
Number of sold lots contracts
Open Price
Price when contract was made
Amount Current value of opened contracts. 1 Lot Contract = 100, 2 lots Contracts = 200
Commission Trade commission for each settled contract

A Sample Trading Platform

How to make a trade?
How to calculate profits?
Opening balance: USD12,820 (HKD100,000)
(see above account for reference)
New balance: USD12,980.5 (HKD101,248)
Placing a short position order:
As you had made 1 lot of contract, each contract is worth 100 troy ounce of gold
You Sold 1 lot at Bid Price: USD1126.1
(See above account for reference)

Since you opened with 1 lot at USD1,126.1, you actually used USD1,282 to buy USD1,126.1 x 100 ounce x 1 = USD112,610 worth of gold.
Leverage of 1: 87.84
You forecast gold price would go down
Each USD1 increase in gold price= USD100 Actual increase in your contract value
Each 1 pip increase in gold price = USD10 Actual increase in your contract value
(USD1 = 10 pips)
You placed 1 lot of Short (Sell) order at 1126.1

Your profits:
USD1.6 x 1 lot x 100 = USD160 (HKD1,248) actual profit
Your required margin: USD1,282 x 1 = USD1,282
Not: if you had placed 5 lots of contracts, your profits would be multiplied by 5:
USD160 x 5 = USD800
Gold price fell to USD1124.5 (Ask price)

You had a floating profit of USD1.6
You close position at USD1124.5 and realised the USD1.6 profit

Calculating Profits:
Using a USD10,000 account
If you place 1 lot order and make USD4 trading profit = USD100 x 4 = USD400 real profits
Equivalent to 4% profit from that trade.
USD1 trading profit = USD100 real profit
Each 1 lot contract buys 100 ounce of gold (XAU)

Order Types

Buying and Selling at Market Prices Placing an order at current Bid or Ask spot gold price
Stop Limit
This is a method to protect your profits. You can set your position to close at a certain price when you want to take profits.
Stop Loss
This is a method to limit your loss. You can set your position to close at a certain price when you want to stop loss.
Buy Limit Order Placing a Buy order when the gold price falls below current price.
Sell Limit Order Placing a Sell order when the gold price rises above current price.
Buy Stop Order
This is when you have an existing open Buy position, and spot gold price is falling, and you want to hedge against losses without closing the position. You place a Buy Stop Order ( open a Sell position) at a price lower than current price.
Sell Stop Order This is when you have an existing open Sell position, and spot gold price is rising, and you want to hedge against losses without closing the position. You place a Sell Stop Order ( open a Buy position) at a price higher than current price.

Place a Buy order at current spot gold price

Place a Buy Limit Order at lower than current spot gold price

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Disclaimer: spot gold trading involves substantial risks and may not be suitable to all investors. Investors who participate in spot gold trading could suffer substantial losses, and could end up loosing all or a substantial part of his/her capital.Investors should read all relevant information on this website and fully understand the risks involved in spot gold trading before making any decisions in starting spot gold trading.Note: Investing in gold bullion markets involves substantial risks. Price of gold can go up and down. Gold investors should fully understand the markets risks before starting to invest in gold. The gold price analysis and gold price forecast we provide in this site is strictly for information only. Margin gold trading is not suitable for everyone, and investors should read all relevant information before starting to invest in gold bullion markets. The investors should consider managing their own risks when engaged in gold trading. The gold trades signals, gold price forecasts and analysis cannot guarantee any profit. Investors should conduct substantial research including long term and short term gold price analysis and gold price forecast, charting analysis before making any gold trading decisions. Investors should also refer to their own gold trading platforms for real-time price of gold quotes. The comments and analysis on gold price trends we provide should be used for reference only. The gold price quotes and gold price charts provided in this website could be delayed.

What you see in your trading account:	(see below trading account)
XAU/USD	XAU is the symbol for London Spot Gold Price, on the trading platform you will see XAU/USD, Spot gold price vs US dollars
Bid Price = Sell Price	The price for selling spot gold
Ask Price = Buy Price	The price for buying spot gold
Buy Order = Long Order	An order for buying gold as you forecast gold price will go up
Sell Order = Short Order	An order for selling gold as you forecast gold price will go down
Open Position = Open Contract	Creating an order (long or short)
Close Position = Close Contract	Closing an order, settling an order
Limit Order	Placing a future order with the price you think gold price will reach, can be long or short order
1 Lot Contract	Placing a 1 lot order, means open a position to buying or selling 1 contract. 1 Contract size = 100 ounce of gold
USD1 = 10 pips	In spot gold trading, each 1 lot contract: each USD1 rise in gold price = USD100 in actual contract value, each 1 pip rise in gold price = USD10 in actual contract value.
Leverage	1 : 85 (depends on current spot gold price)

What you see in your account summary:	( For Example: See below trading account - )
New Balance	Balance in your account
Profit / Loss	Profit and loss during the trading day
Floating Profit/Loss	Profit or loss which is unrealised, ie open position's fluctuating profit or loss that is not settled yet.
Equity Balance	Net available balance in your account (excluding the floating profit/loss amounts and margin requirement)
Margin Requirement = deposit requirement	Required amount of deposit deducted from your account balance to create open positions. For example: If a Deposit amount of HKD10,000 or USD1282 is required for opening a position of 1 lot. When a 1 lot position is closed, the USD1282 will be added back to Equity Balance.
Effective Margin	Remaining margin amounts available for placing new orders
Call Margin	Required additional margin for maintaining existing opened positions.
Low Price	Daily lowest gold price
High Price	Daily Highest gold price
Bought Lot	Number of bought lot contracts
Sold Lot	Number of sold lots contracts
Open Price	Price when contract was made
Amount	Current value of opened contracts. 1 Lot Contract = 100, 2 lots Contracts = 200
Commission	Trade commission for each settled contract

How to make a trade?		How to calculate profits?
Opening balance: USD12,820 (HKD100,000) (see above account for reference)		New balance: USD12,980.5 (HKD101,248)
Placing a short position order:		As you had made 1 lot of contract, each contract is worth 100 troy ounce of gold
You Sold 1 lot at Bid Price: USD1126.1 (See above account for reference)		Since you opened with 1 lot at USD1,126.1, you actually used USD1,282 to buy USD1,126.1 x 100 ounce x 1 = USD112,610 worth of gold. Leverage of 1: 87.84
You forecast gold price would go down		Each USD1 increase in gold price= USD100 Actual increase in your contract value Each 1 pip increase in gold price = USD10 Actual increase in your contract value (USD1 = 10 pips)
You placed 1 lot of Short (Sell) order at 1126.1		Your profits: USD1.6 x 1 lot x 100 = USD160 (HKD1,248) actual profit
Your required margin: USD1,282 x 1 = USD1,282		Not: if you had placed 5 lots of contracts, your profits would be multiplied by 5: USD160 x 5 = USD800
Gold price fell to USD1124.5 (Ask price)
You had a floating profit of USD1.6
You close position at USD1124.5 and realised the USD1.6 profit

Order Types
Buying and Selling at Market Prices		Placing an order at current Bid or Ask spot gold price
Stop Limit		This is a method to protect your profits. You can set your position to close at a certain price when you want to take profits.
Stop Loss		This is a method to limit your loss. You can set your position to close at a certain price when you want to stop loss.
Buy Limit Order		Placing a Buy order when the gold price falls below current price.
Sell Limit Order		Placing a Sell order when the gold price rises above current price.
Buy Stop Order		This is when you have an existing open Buy position, and spot gold price is falling, and you want to hedge against losses without closing the position. You place a Buy Stop Order ( open a Sell position) at a price lower than current price.
Sell Stop Order		This is when you have an existing open Sell position, and spot gold price is rising, and you want to hedge against losses without closing the position. You place a Sell Stop Order ( open a Buy position) at a price higher than current price.