What is Gold Trading?
Gold Trading is a term that is commonly used by gold investors & traders to describe trading activity in the xauusd market that is carried out by traders, investors and speculators.
In gold trading a trader can buy or sell gold. A trader will buy gold if they think the value of the gold is likely to appreciate in the future. A Gold Trader will sell gold if they think the value of the gold is likely to depreciate in the future.
The Gold Market is an over the counter market which means trading is carried out through a network of the big international banks; this gold trading network is commonly referred to as the interbank network. This interbank gold trading network consists of banks and gold brokers which are in different locations. These interbank network is responsible for providing the xauusd prices at any particular time to the traders and other gold market participants who want to buy or sell gold. In gold trading the xauusd price is constantly changing and this xauusd price is denoted by what is known as a Gold Trading Quote. In Gold Trading the Gold Price is displayed as a Gold Quote. This gold trading quote is constantly changing and the interbank network will update automatically the current gold trading quote and traders can then trade the xauusd at the current xauusd price.
XAUUSD Trading Quotes
Xauusd prices of gold trading instruments is displayed using Gold Trading Quotes. This is the xauusd price at which any gold trader wanting to trade gold will trade at.
Because xauusd prices are constantly changing it means that xauusd traders can take advantage of these xauusd price movements to make profits by trading these xauusd price movements. The xauusd price of any gold trading instrument will keep moving because of demand supply. This is because there are many participants trading gold in the open gold market and therefore this means that the xauusd price quotes will get determined by the current market forces. These market forces may be determined by factors such as an increase in demand for gold.
XAUUSD Trading Pips
In gold trading the xauusd price moves are measured in points commonly known as Pips in the gold trading market. The pip is used to calculate the profit or loss that a Gold Trader makes in a particular trade. For example if a trader makes a trade which moves 50 pips in his direction, then the profit of the trader will be calculated as 50 gold trading pips. Pip in gold trading is represented as the second last decimal point in the Gold Trading Quote and it is made up of pipettes - pipettes are fractions of a Gold Trading Pip.
XAUUSD Trading Lots
In xauusd trading - gold is traded in units known as gold lots or gold trading contracts.
Gold Trading Leverage
Because not many traders can afford to trade large units of gold trading contracts, there is gold trading leverage in gold trading which means that xauusd traders can borrow money and use the borrowed money to make trades with. For example gold leverage of 100:1 means that a trader with capital of $10,000 can borrow upto 100 times using the 100:1 leverage option & therefore after borrowing using this gold trading leverage the trader will have a total of $10,000 multiplied by 100, which means the trader will have a total of $1,000,000. This gold leverage is what makes Gold accessible to retail xauusd traders because retail traders can begin with little capital of their own & use gold leverage to borrow the rest of the money required for trading. The money that the trader deposits is referred to as the trader’s margin & a trader can continue borrowing money using this gold leverage option as long as they have the required gold trading margin in their xauusd trading account. This is why traders must have the required xauusd trading account balance in their xauusd trading account to open the trades they want to.
