Learn How to Trade Gold as a Beginner: A Safe Haven Instrument - Trader's Toolkit - Fortrade Blog (2024)

Global investors frequently trade gold for the precious metal's utility, be it for its safe-haven appeal or its use in manufacturing. Gold is also an attractive trading instrument for beginner investors, as there are many ways to trade the yellow metal.

Indeed, it could be the premier safe-haven instrument since investors take cover in gold when there is market turmoil, artificially low-interest rates, geopolitical tensions, or a crisis in a sector like banking.

Note: Fortrade offers the ability to trade the price changes of gold with CFDs and NOT to buy/sell ownership of the precious metal itself.

1. Do Your Research

The essential component of gold investing is doing your research and due diligence. This is vital. But what exactly could you be researching anyway?

1. Price So, what determines the price of gold? Since commodities are priced in dollars, there are many factors, such as monetary policy, the performance of the broader financial markets, and the US Dollar Index (DXY).
2. Strategy Knowing how to trade is crucial, too, as you can incorporate a blend of technical indicators with fundamental information. The leading indicators to monitor are the relative strength index (RSI), moving averages (MA), and the direction of the DXY.
3. Platform Whether purchasing gold-focused exchange-traded funds (ETFs) or looking into gold stocks, brokerage firms are the best place to start your gold trading endeavour.
4. Competition For the most part, gold traders are bullish on the metal commodity, so they will inevitably come face to face with bears. Some argue it is essential to be both bullish and realistic about gold since there will always be downward trends, whether in interest rates or the DXY.

» Ready to begin? Learn more about opening an account with Fortrade

2. Choose Your Instrument and Strategy

There are many ways to trade gold: stocks, ETFs, futures, (CFDs), mutual funds, and physical bullion. But what are these exactly?

• Stocks: A mining company that extracts gold and other metals.
• ETFs: A pooled investment of gold stocks and bullion.
• Futures: Trading the front-month contract on the COMEX division of the New York Mercantile Exchange (NYMEX).
• CFDs: Traders will take a position on the future value of the underlying instrument without ever having direct ownership.
• Mutual funds: Like ETFs, they allow you to purchase an investment fund that offers exposure to gold-related instruments but cannot trade it throughout the session.
• Bullion: Physical gold that you can hold in your safe.

» Find out if CFDs offer higher leverage than traditional trading

Strategies for Trading Gold

1. Day trading Day trading is for investors traveling in and out of gold throughout the session, typically in the first two hours (9:30 a.m. to around 11:30 a.m.).
2. News trading This is also a short-term strategy, but instead, you are trading gold based on news of the day, such as buying or selling after a central bank policy announcement or a jobs report.
3. Position trading An investor will take a position in gold and hold it for an extended period until the price reaches your target.

» Here's a detailed breakdown of gold CFD trading for beginners

3. Create Your Account

The next step is to open your trading account. However, if you're nervous about beginning and depositing real funds, you could test out a demo account first to experiment with the market and obtain some investment experience before using real money.

In addition, be sure that you select a reliable and reputable brokerage for your trading needs, typically one that has been in business for a long time and is located in your country.

4. Open Your First Trade When Ready

Now that you have begun your journey, you could start trading. Some argue that it is good that you establish a strategy of your choosing first, be it a long bullish hold or a short bearish position. In that case, it is common to stick to your strategy as long as your campaign involves completing the necessary research, of course. You might be concerned about losses and risk, but there are ways to limit losses and manage risk. One of the mechanisms is a stop-loss order.

5. Watch Your Position and Close the Trade

As you become accustomed to trading gold, it would be prudent to monitor your position in the opening sessions to see how the metal is performing, if the price movements align with your strategy, and how gold responds to various factors in the global economy. But when could you close your position? There are many factors that you could consider first:

• How long are you planning to hold these gold investments?
• Is your strategy still holding up after several weeks or months?
• Has gold reached your price target?
• Do industry reports or economic calendars suggest the gold market is heading in a different direction?

» See how to enhance focus and discipline for successful investing



There will inevitably be stumbling blocks on your journey when you are in the beginning phases of trading. One of the things to bear in mind is that trading carries risk, and that there is always a real possibility of a potential loss. Therefore, it is important to try and not get discouraged if you do not see potential profits immediately. Like with most other things in life, it takes practice and research for a positive result in gold trading. 

In the end, always learn as much as you can in trading because even seasoned experts discover new methods, strategies, indicators, and styles all the time!