Spread Bet on Gold - Commodities Spread Trading
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The commodities sector has been rising recently on the back of strong metals markets. High demand and queries over supply have lifted the prices of base metals.
Tin surged to an all-time high of $15,700 a tonne. Supply queries in Indonesia have been helping keep the price up.
Likewise lead also rose to an all time high of $3,485 per tonne. That's an increase of 110% since January.
Investor worries over the on-going US subprime mortgage market have led to increased demands in Bonds and Precious Metals. With traders seeking to reduce their risk and invest in safer markets, Gold has reached a 10 week high.
At the moment the Gold (October) market is valued at $680.7 - $681.5 with FinancialSpreads.com.
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As with many markets, spreadbettors can financial spread trade the future value of commodities. ie, investors can financial spread trade on a specific commodities increasing or decreasing in value, eg trading on Gold to be worth more than $681.5 by 25 September 2007, the settlement date of the Gold (October) market.
Note that for the Gold market, you trade in $X per point, where a point is $0.1 of Gold movement. eg if your stake was $40 per point and the price of Gold moves $0.4 then that would be an $160 difference to your profit and loss.
So let's say you see the live quote on an online spread betting service and it displays a spread of $680.7 - $681.5. Let's also say that you've done your analysis and think that the Gold market will go up above $681.5 within the next month or so.
Therefore you buy at $681.5 for a stake of $20 per point.
If by the end date ie, 25 September 2007 the Gold the price settles at $682.5 you will have made a profit.
Your profit/loss would be calculated by taking the difference between the level the trade closed at, ie $682.5 and the price you bought at, ie $681.5.
Profits = (($682.5 - $681.5) / 0.1) x $20 per point stake.
= (1 / 0.1) x $20 per point stake.
= $200 profit.
However if the market did not move as you originally forecast and the market closed down at $680.5, you would have lost.
Loss = (($680.5 - $681.5) / 0.1) x $20 per point stake.
= (-1 / 0.1) x $20 per point stake.
= -$200 loss.
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Tight Spreads, No Commissions, No Fees. Trade
1000s of Equities, Indices, Forex and Commodities markets.
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'Spread Bet on Gold - Commodities Spread Trading' by KK, updated 07-Aug-07
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