Gold trading remains a solid and fair choice for many investors.
Over the years, finance experts have termed gold trading as one of the most profitable options for active and passive investors.
In fact, online gold trading is now one of the most secure and easy ways to trade and earn handsome profits.
The price of gold is soaring as investors and consumers alike seek to diversify their portfolios with a historically safe, stable asset. And while this surge in interest has led to some great opportunities for savvy traders, it’s also opened up the market to multiple frauds and scammers.
Whether it’s about safety or return on investment, you may be skeptical about the performance of gold stocks.
As a result, you may not buy these stocks and miss out on some incredible deals at times.
So, in this post, we will debunk some of the popular myths about gold trading so that you understand why it can be your next trading option.
You Need to Take Gold Delivery for Forex Trading
Gold trading is a much more evolved phenomenon than conventional trade in older times. Previously, buyers would own the gold, i.e., they would take the physical possession of the yellow metal to secure the deal.
However, in the times of online trading and innovative gold trading platforms, it’s much different now.
The idea that you need physical delivery of gold from the forex market is a misconception.
Some people believe when you trade a commodity, you must also pay for the transportation and storage of the physical assets.
So, when you’re talking about gold, it becomes a bigger problem considering that the storage and transportation have a certain level of security risk attached to them.
But it’s just a myth. Imagine if you had to pay for all those things, it would significantly reduce your profit and induce unwanted expenses.
In reality, there is no involvement of physical delivery and taking physical possession of gold assets. It’s one of the reasons why people prefer forex trading, as it doesn’t involve managing costs for the material handling of the purchase.
When you purchase any commodity from the online market, there is no physical delivery of the assets.
However, once you close a trade deal, you have the right to access a certain amount of gold.
The Profit Isn’t Great Due to the Lack of Leverage
For US traders, forex trading has its own set of unique challenges. For one, they cannot trade commodities using leverage.
As a result, many traders assume that it leads to fewer profits than those with leverage trading.
So, they think the deals won’t yield significant gains when they trade from the Forex market.
This misconception prevents many potential investors from entering the gold trading world.
The truth is when you work with a gold trading platform without leverage, it benefits the trader in many ways.
But you are at a greater risk of loss as an investor with high power even when there are higher profits on offer.
Moreover, higher leverage can also increase the chances of loss.
Over the years, investors had lost considerable investments when they traded with high power.
However, increased leverage can primarily induce potential losses when the market moves against your expectations.
When you trade without leverage, it’s your own money at stake.
You can change the gold with currency and earn decent profits. With less risk and better stability, unleveraged gold trading is better for most traders.
| Gold Price Performance: % Annual Change | |
| Year | USD |
| 2010 | +29.5% |
| 2011 | +10.1% |
| 2012 | +7.0% |
| 2013 | -28.3% |
| 2014 | -1.5% |
| 2015 | -10.4% |
| 2016 | +9.1% |
| 2017 | +13.6% |
| 2018 | -2.1% |
| 2019 | +18.9% |
| 2020 | +24.6% |
| 2021 | -3.5% |
| 2022 | +1.0% |
| Average | 8.0% |
Source: Goldprice
You Need to Start With Huge Investments to Enter the Gold Trading Forex Market
Image Source: LEHNER INVESTMENTS
Trading gold is not as difficult as people make it out to be. It’s the perfect way to diversify your portfolio, increase your returns, and hedge against inflation.
However, if you’re not an expert in market trading, you might think you need to make a massive investment to reap the promised benefits.
Most people assume they need to be rich to invest in gold due to a lack of leverage trading in the US Forex market.
That’s far from the truth. Most importantly, you don’t need to put everything you own into gold stocks to participate in the gold market.
Generally, commodity brokers let you invest up to $5000 in gold trading. However, it’s not wise to support all your capital in gold.
The best option is to go with an objective-based approach.
Set small targets for yourself and invest only a specific percentage of your investment at one time.
For instance, it’s better to aim for a 25% return in the long run instead of going for a more significant recovery in a quick time.
Trading Commodities Doesn’t Benefit Traders
Such myths are often propagated by traders who don’t understand how to trade commodities.
People who have suffered in the forex market tend to spread such false claims to hide their failures.
Generally, traders fail to secure profits when they don’t time their decisions appropriately.
For instance, when traders don’t have sufficient knowledge of the correct trading times, they fail to score profits. So, it starts becoming a no-return investment for them.
Therefore, you must understand gold trading requires comprehensive knowledge of forex trading and market conditions.
In addition, you must know the factors that drive gold prices and how the current sociopolitical conditions play a role in these matters.
Therefore, online gold trading platforms that provide high-quality insights and accurate market predictions have become common.
Furthermore, they offer copy trading tools and other intelligent options that help investors to make safer and more thoughtful decisions about their gold trading.
When you have a decent knowledge of price trends and how non-commodity currency factors in gold prices, you can make better decisions in the gold forex market.
Otherwise, it’s pretty easy to blame it on the trade for not being a profitable option for traders.
Conclusion
Gold trading is about making intelligent decisions at the right time. Therefore, it requires knowledge and experience to become a better gold trader.
However, when people fail to succeed in this market, they tend to spread myths to hide their failures.
But now that you know the common myths about gold trading and what you should do in certain situations, it should be easier to enter the market via an online gold trading app.