How Do I Trade Gold

When engaging in online gold trading, a trader has the option to either purchase or sell XAUUSD/gold lots with the objective of generating profit.

To trade gold, one might buy if they believe its value will rise against the US dollar or sell XAUUSD if they predict the price of gold will drop relative to the dollar.

Buy Trade - Go Long

When the prices of xauusd go up, traders will buy gold, which is also known as going long, or buying.

In the trade shown, XAUUSD prices rise. Open a buy then. This is going long. Hold the buy as prices keep climbing up.

XAUUSD prices keep climbing as long as both moving averages point up. These two averages help spot the price direction, or the trend. The approach with two moving averages is called the MA crossover system. It pairs a short one, like the 5-period MA, with a longer one, like the 7-period MA. They reveal the overall path of gold prices. At any point, these lines head up, down, or flat. Up means rising prices. Down means falling. Sideways shows prices stuck in place, with no clear up or down move.

Sell Trade - Go Short

Falling gold prices prompt traders to sell. They call this short selling or just going short.

In the outlined trade, gold prices are exhibiting a downward trend, as seen through both moving averages (MAs) pointing lower. This scenario suggests opening a sell trade, commonly referred to as going short. The trader would maintain the short position as long as price movements continue to decline.

XAUUSD Charts

Now that you know as a trader when to buy and sell gold, you need to know how to sell or where to place the buy or sell trade. To do this, a trader will use the xauusd charts that are provided. A xauusd/gold chart shows how gold prices change, using a graph that traders can use to understand and analyze how the xauusd price is moving.

This daily gold chart tracks XAUUSD from $1048 to $1267 per ounce. The rise happened from November 2015 to February 2016.

The price is shown by the vertical axis that has price markings and the date is displayed by the horizontal axis which has date and time markings.The price of Gold and its movement is represented in the form of a chart. The chart shows an upward movement of the price. Traders who are trading gold will analyze this price movement to know which direction to take. In the chart example above because prices are moving upwards a xauusd/gold trader would buy the xauusd and go long.

A trader possesses the capability to initiate a buy or sell trade directly from this specific chart view. By executing a right-click anywhere on the chart, a context menu appears, from which the Gold trader can select the option to open a new trade order.

Calculating Profit

In gold trading, profit is determined by the price movement - the disparity between the price at which a trader opens a position and the price at which they close it will be utilized for profit calculation.

For instance, if gold prices rise from $1048 per ounce to $1267 per ounce and a trader initiates a buy position at $1060 per ounce and closes it at $1260 per ounce, they would gain a $200 price differential.

Gold trades in lots of 100 ounces. One lot means $100 per $1 ounce move. You handle 100 ounces at once. So, that $1 shift multiplies by 100 in your profit or loss.

This means that is a trader had bought 1 lot of gold at $1060 dollars per ounce & closed the trade at $1260 per ounce, where the price difference would be $200 dollars. Then $200 difference multiplied by $100 dollars profit per $1 move, then this would mean the Gold trader would have made $20,000 dollars in profit from this trade position.

To buy 1 lot of XAUUSD, that's 100 ounces. At $1050 per ounce, a gold trader needs $105,000. That's $1050 times 100 ounces. Few retail traders have that cash. Gold brokers offer borrowed funds to help. With a 100:1 ratio, traders control 100 times their own money. So for one lot, deposit just $1050. That times 100 equals $105,000 in control.

XAUUSD Trade Software

Access to gold price charts is facilitated through the specialized gold trading software furnished by xauusd brokers. This trading platform serves as the essential software interface connecting traders to their brokers, enabling them to execute trade positions within the electronic gold trading arena.

The platform creates the price charts for the trader who is online. The platform also figures out how much money the gold trader makes or loses on trades, so the trader doesn't have to do the math themselves because the platform does it automatically.

You can get the platform from the xauusd broker's website, and new traders can learn to use it by using a practice trading account.

Practice Demo Trading Account

A demo account lets traders practice the platform and open or close trades without real money. It uses fake funds so you can learn XAUUSD trading. Once you gain skills to make profits, gold traders can switch to a live account for real gold trades online.

Live Gold Trade Account

The live xauusd account is what people use to trade gold online. A trader puts real money into this account to trade xauusd. Then, they can make xauusd trades in the market, and any money they make or lose goes into this account.

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