When we say TRADE GOLD, some people think we are trading physical gold. No, we are not. You don't get to take the gold home with you.
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Spot gold refers to the most active front-month futures contract. This implies the futures contract that has the closest delivery and the one with the best price.
It's like buying a shipment online. You buy the one that arrives in Kenya fastest but also the cheapest.
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It's like buying a shipment online. You buy the one that arrives in Kenya fastest but also the cheapest.
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On the other hand, the gold bars in the image above are referred to as bullion gold. You can buy them directly from a dealer and take them home with you.
They are priced slightly higher than spot gold, as the dealer buys from spot market and adds a margin.
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They are priced slightly higher than spot gold, as the dealer buys from spot market and adds a margin.
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When trading with a local forex broker such as Scope Markets, you buy spot gold speculatively. That is, with the goal of selling later with profit.
Gold is abbreviated XAU and is either priced in US Dollars or Euros.
You trade XAUUSD or XAUEUR
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Gold is abbreviated XAU and is either priced in US Dollars or Euros.
You trade XAUUSD or XAUEUR
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Gold is quoted in Ounces. 1 Ounce of gold is equivalent to 0.0283495 kilograms of gold.
At this moment, 1 ounce of XAUUSD is trading at $1975.32.
So when you are trading, you specify the number of ounces that you want to trade.
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At this moment, 1 ounce of XAUUSD is trading at $1975.32.
So when you are trading, you specify the number of ounces that you want to trade.
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Like other markets, there are standard contract sizes. If you are trading eggs, the contract size is a tray that contains 30 eggs.
So, if you trade 1 contract of eggs, you trade 30 egss each costing say KES 15.
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So, if you trade 1 contract of eggs, you trade 30 egss each costing say KES 15.
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The standard contract size in gold is 100 ounces. So if you buy 1 contract of gold, you are buying 100 ounces of gold with each ounce costing $1975.21
Your position will cost $197,521.
Yes, it's that expensive.
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Your position will cost $197,521.
Yes, it's that expensive.
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The broker makes it easy for you. At Scope Markets, you get 1:400 leverage. This means that the broker funds $399 and you fund $1 in every$400 worth of position.
In this case, you fund $197,521 / 400 = $493.80
$493.80 is the margin requirement for you to execute that trade
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In this case, you fund $197,521 / 400 = $493.80
$493.80 is the margin requirement for you to execute that trade
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Having bought 1 contract of gold, if price moves by a point, e.g. moves from $1975.21 to $1975.22, you make $1 profit since the $0.01 gain is multiplied by 100 ounces.
If you lose by a point, you lose -$1 too.
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If you lose by a point, you lose -$1 too.
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It's that simple, you wake up, open an account, verify account, deposit funds using M-Pesa, learn how to speculate on Gold with me, and start benefiting from Gold market opportunities.
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