Gold Spread Trading
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Where Can I Open a Gold Spread Trading Account?
Many spread trading accounts offer access to thousands of financial markets including commodities, like gold and crude oil, but also stock market indices, forex and individual shares.
Spread trading provides a tax free* investment option, two way trading and no commissions, however, some spread trading companies, like Financial Spreads, also offer easy access with 24 hour trading and state-of-the-art platforms.
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| Gold Daily - Spread Size |
4 |
5 |
4 |
4 |
5 |
4 |
5 |
4 |
| Gold Daily - Min Stake |
£1 |
£1 |
£1 |
£0.1 |
£1 |
£1 |
£1 |
£1 |
| Gold Future - Spread Size |
6 |
6 |
6 |
6 |
7 |
6 |
13 |
6 |
| Gold Future - Min Stake |
£1 |
£1 |
£1 |
£0.1 |
£1 |
£1 |
£1 |
£1 |
Comparison Notes
Advantages of Gold Spread Trading
Gold spread trading has several important advantages over more traditional investment options:
- Spread trading is tax free*. You do not pay income tax, capital gains tax or stamp duty on any of your trades.
- When spread trading, you deal directly with a spread trading firm and so your trades are normally commission free with no broker’s fees. This can help to keep your trading costs down.
- A single spread trading account can offer a wide range of financial markets from commodities, like gold, crude oil and copper, to stock market indices, currencies, shares, bonds and even interest rates.
- When spread trading, you are merely speculating on the future price of the market and so you can trade on the gold to go down as well as up. This is in contrast with traditional investment formats which limit investors into trading on markets to rise.
Gold Spread Trading Example
If you are going to spread trade on a commodity such as Gold then, on visiting a spread trading site like Financial Spreads, you would currently see the Gold Rolling Daily market priced at $1,208.7 - $1,209.2.
This means you can speculate on Gold moving higher than $1,209.2 or moving lower than $1,208.7.
With financial spread trading, investors trade on every unit the market moves up or down; with Gold spread trading markets a unit is $0.1 of the commodity's price movement.
As an example, you might decide to trade £2 for every $0.1 the price of Gold goes up or down.
Note that you can also spread trade on Gold in Dollars or Euros, i.e. €x per $0.1.
Rolling Daily Markets
You should note that this example considers a 'Rolling Daily Market' and so there is no predetermined settlement date for this market. As a result, if the trade is still open at the end of the trading day, it simply rolls over to the next trading day.
If your trade does roll over and you are speculating on the market to:
- Rise - then you would normally pay a small financing fee, or
- Fall - then a small payment is often credited to your account
To learn more about Rolling Daily Markets please see Rolling Daily Spread Trading.
Spread Trading on Gold to Go Up
If you were to go long of Gold at $1,209.2 and the commodity went up then the spread might change to $1,215.2 - $1,215.7. If that happened, you might decide to close your trade for a profit at $1,215.2.
Profits (or Losses) = (final level of the market - opening level of the market) x stake per $0.1
Profits (or Losses) = ($1,215.2 - $1,209.2) x £2 per $0.1 stake
Profits (or Losses) = $6.0 x £2 per $0.1
Profits (or Losses) = £120 profit
Financial markets also move down, if the price of Gold was to drop to $1,203.5 - $1,204.0, you could decide to close your position to limit your losses. In that case, you would sell at $1,203.5.
With the same £2 per $0.1 stake:
Profits (or Losses) = (final level of the market - opening level of the market) x stake per $0.1
Profits (or Losses) = ($1,203.5 - $1,209.2) x £2 per $0.1 stake
Profits (or Losses) = -$5.7 x £2 per $0.1
Profits (or Losses) = -£114 loss
Spread Trading on Gold to Go Down
An important benefit of spread trading is that you can short the markets.
At the beginning of this example, the spread was $1,208.7 - $1,209.2.
If you were to sell Gold at $1,208.7 and the market fell then the spread might become $1,201.6 - $1,202.1. If so, you could close your trade for a profit by buying at $1,202.1.
Profits (or Losses) = (opening level of the market - final level of the market) x stake per $0.1
Profits (or Losses) = ($1,208.7 - $1,202.1) x £2 per $0.1 stake
Profits (or Losses) = $6.6 x £2 per $0.1
Profits (or Losses) = £132 profit
The markets can of course rise, if the gold market had moved up to, for example, $1,214.5 - $1,215.0, you may want to close your trade in order to limit your losses. If that were to happen, you would buy at $1,215.0.
You would do this with the same £2 per $0.1 stake:
Profits (or Losses) = (opening level of the market - final level of the market) x stake per $0.1
Profits (or Losses) = ($1,208.7 - $1,215.0) x £2 per $0.1 stake
Profits (or Losses) = -$6.3 x £2 per $0.1
Profits (or Losses) = -£126 loss
Gold Rolling Daily market quoted as of 09-Jul-10.
Where Can I Find Gold Spread Trading Charts?
Many spread trading companies offer candlestick charts on the majority of their financial markets, as well as a wide range of historical data and analysis.
For example, you can make use of gold spread trading charts with a variety of Moving Averages and other statistics such as Bollinger Bands.
The charts can also show data over a variety of time scales, ranging from minutes to hours, days or even weeks depending on your personal investment strategy.
Gold Spread Trading Companies – Account Services Comparison
The companies detailed below all offer gold spread trading markets as well as all the usual benefits of spread trading such as tax free*, commission free trading, a wide range of financial markets and two way trading.
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| Online Application |
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| Credit Account |
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| Deposit Account |
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| Stop Loss Available |
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| Automatic Stop Loss |
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| 24 Hour Trading |
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| FSA Authorised and Regulated |
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| Candlestick Charts |
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Comparison Notes
Gold Spread Trading and Risk Management
Investing in the gold spread trading markets can be exciting, particularly when thinking about the amount of money you might make. Profits are rarely seen as a bad thing. Nevertheless, we should all understand that we can lose money as well.
Naturally, as with all investing, be it on shares, pensions or CFDs, there is a downside and with spread trading you need to be careful because you can lose more than you initially invested.
The following risk warning also provides you with some other points to think about, "Spread trading does carry a high level of risk to your capital. Before trading, ensure that spread trading matches your investment objectives. Familiarise yourself with the risks involved. Seek independent advice where necessary".
At the same time though, you are able to put limits on your trades to help reduce your potential losses without impacting your upside, for more information see Stop Loss Orders.
Another important aspect of risk management to consider is using smaller stake sizes such as £1 per point or $1 per point. This is an all too often overlooked method for reducing your risks and is something that any investor should bear in mind.
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Financial Spreads
"With FinancialSpreads.com you get all the normal
advantages of Spread Trading plus commission free trading on 2,000+ markets, 24 hour trading and..." read
Financial Spreads review.
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Risk Warning: Spread trading carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Gold Spread Trading' by DB, updated 26-Jan-12
For related pages also see:
Index Spread Trading, updated 26-Jan-12
Index Spread Trading - Where to open an Indices Spread Trading account, where to find Index spread trading charts, Indices risk management tips, stock market index spread trading examples and...read article: Index Spread Trading.
Commodities Spread Trading, updated 26-Jan-12
Commodities Spread Trading - Where to open a Commodities Spread Trading account, where to find Commodity spread trading charts, Commodities risk management tips, Commodities examples and...read article: Commodities Spread Trading.
Financial Spread Trading, updated 26-Jan-12
Financial Spread Trading - A look at where you can open a financial spread trading account, where to get live financial spread trading charts, risk management tips, spread trading examples and...read article: Financial Spread Trading.
Forex Spread Trading, updated 26-Jan-12
Forex Spread Trading - A look at where you can open a forex spread trading account, where to get live forex charts, forex risk management tips, trading examples and...read article: Forex Spread Trading.
FTSE Futures, updated 30-Jan-12
FTSE futures. Where to find FTSE real-time prices and charts, how to trade the FTSE index and the most popular stock market futures questions on FTSE plus...read article: FTSE Futures.
Dow Futures, updated 30-Jan-12
Dow futures. Where to find Dow real-time prices and charts, how to trade the Dow index and the most popular stock market futures questions on Dow plus...read article: Dow Futures.
S&P 500 Futures, updated 30-Jan-12
S&P 500 futures. Where to find S&P 500 real-time prices and charts, how to trade the S&P 500 index and the most popular stock market futures questions on S&P 500 plus...read article: S&P 500 Futures.
DAX Futures, updated 30-Jan-12
DAX futures. Where to find DAX real-time prices and charts, how to trade the DAX index and the most popular stock market futures questions on DAX plus...read article: DAX Futures.
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