Gold Trading Specifications That Every Trader Should Be Aware Of

While traders prefer to place a greater emphasis on gold trading tactics, the trade specifications, which are really quite significant, are generally given the least amount of attention. Discover the prerequisites for trading gold at Topforexrating.com, as well as the specifics of the trade specification needs and information.

A totally different strategy is required when trading gold CFDs compared to when trading currencies. This is simply due to the nature of how gold prices act when contrasted to the behavior of other financial markets. When it comes to trading techniques, gold and foreign exchange are often employed in conjunction with one another by the majority of traders. It might be tough to produce regular gains in gold trading if you don't comprehend the fundamentals of what's going on. The following three elements are very significant when it comes to gold trading, and they are something that every trader should be aware of at all times. This post focuses on the Gold CFD contracts that are available for trading on Topforexrating.com, and it is written in a straightforward manner.

Gold – Specifications

Initial Margin:

It is the amount of collateral necessary to open a position in gold that is known as the initial margin. Orbex's starting margin for gold is $1000 for a trading size of 1 lot, with the maximum margin being $2000. (100,000). To trade 0.50 lots of Gold, your first margin need would be $500, or a $100 margin requirement for trading 0.10 lots of Gold.

Why is margin important?

Understanding the initial margin might assist you in determining the amount of your trades and how to execute them. For example, if you have $1000 in trading equity, it would make sense to trade 0.10 lots in Gold, where the required margin of $100 is already set in place. This gives you with a $900 profit margin to work with.

Minimum contract size: 

In order to trade gold, you must have a minimum contract size of 0.10 lots. One standard lot of gold is equivalent to one hundred ounces of gold. As a result, when you trade, 0.10 lots equals 10 ounces of gold are being traded.

It is vital to be aware of the minimum contract size in order to manage your position effectively. Because the contract size or number of lots is closely tied to the needed margin, understanding these information will allow you to properly position your transaction sizes in relation to the amount of trading money that you have available to you.

Tick Size and value:

The smallest possible tick size is 0.01. The price of gold is expressed in two decimals at Orbex, for example, 1200.12 and so on. Each tick, or 0.01 cent, is worth $1 for a regular lot, or $0.10 if you are trading the smallest possible lot size, which is 0.10 lots.

The importance of the tick size in terms of gold is likely the most significant.. Because each tick is equivalent to $10 for a regular lot size, you can immediately figure out how much loss or profit you may expect from your transactions based on the numbers.

Swaps:

In the event that you leave your gold positions open overnight, your trades will be subject to overnight rollover swaps. Your gold transaction has a swap rate of -0.347 points for long positions and a swap rate of -0.236 points for short positions that are held open overnight. To illustrate this point further, if you are trading a one-lot position in gold, long holdings held overnight are subject to a -$0.347 (rounded to -$0.35) swap, while short positions are subject to a -$0.236 (rounded to -$0.24) swap.

Gold – Trade Example:

We bought one lot of gold for $1250.98 dollars. Consequently, the needed margin was $1000, and each tick (0.01) is worth $10 in the market. As an example, if gold had climbed from 1250.98 to 2151, a 0.02 tick change, a profit of $2 would have been made. Additionally, if gold prices decreased from 1250.98 to 1250.68, it is a 0.30 tick shift, which is worth $30 (0.30 x $100) in terms of money.

Why is it important to understand gold specification?

When traders are aware of the margin requirements, swaps, and tick size, they are less likely to make mistakes in their deals. Traders will be able to better manage their gold trading positions if they are aware of the actual amount that they may earn or lose on each deal that they hold, including any extra swaps that have been applied.