Gold Trading Strategies

With the price of gold hitting all time highs many traders are wondering if gold trading is a great way to be able to make additional profits. One way that this can be done is through the trading of the gold futures contract. This is where you are speculating that the price of gold will rise or fall in the future. Historically speaking gold has been a great long term investment during times of economic uncertainty or crisis. Given the fact that the world is currently in a financial crisis and you have many different international tensions flaring gold is showing why it is such a great investment during times of great challenge.

There are many ways that you can profit from the up and down movements in the price gold. One way is to play the long side, which is where you are speculating that prices will rise in the future. Another way is to play the short side, which is when you are speculating that prices will fall in the future. When you are going to be trading any of the different commodities it is important to pay attention to the tick that is taking place.

This is where as futures contract is being purchased or shorted it is reflected by a positive up tick or a negative down tick. What you want to do is enter a position on a negative down tick if you are planning on going long or a positive up tick on the short side, helping you to enter the futures contract at the right time. A common strategy used to trade gold is the straddle, which is where you are going long and short at the same time. The idea is to purchase both contracts at the same price and time frame so that you can take advantage of the volatility to make money.

David Pit