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How To Trade Gold?

The best and most experienced best forex traders in the world agree on one thing: every successful investment portfolio should include gold, even if only a little bit. Gold trading and investment has gained popularity over the years because of the promising uptrend gold was following. If you haven’t invested in gold yet, it’s never too late to get started. Especially now that gold prices are going down, it’s a good time to buy. However, before you just start to trade gold without any strategy, here are some things you should know about it in particular:

Follow Dollar Cost Averaging
The best way to invest money in gold in a balanced way is through the dollar cost averaging technique. This requires investing a fixed amount of money from your investment budget in gold every month without considering the current price of gold. Most traders in this case advocate spending 3 to 10% percent of your budget towards gold while the more aggressive ones allocate as much as 20% of their budget to gold investment. This will allow you to spread the risk of investment over time.

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Buy Physical Gold
The most effective investment is to buy gold in physical form, including gold coins, bars, and even jewelry. However, make sure you buy this gold without big premiums, keeping the purchase price as close to the spot price as possible. 10% premium is the highest cap most investors put on gold bullion purchases. However, depending on the type of gold item you are buying, the premium can be as high as 75% so you need to be careful when choosing the gold item you are planning to purchase.

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Trading in Non-Physical Gold
One major downside to buying physical gold is storing it in a secure place. Usually, people arrange for bank vaults for storage. To avoid the trouble, a lot of people avoid investing in physical form of gold, switching to online or spot gold trade instead. This method is not only simple to handle but also less expensive to manage, making it ideal for those who don’t have much capital to start investing. You simply have to buy and sell gold contracts instead of gold. However, there is one mistake people often make when they trade gold online: they over-leverage. Even though it’s easy to spot trade, money management is still an important rule to follow at all times.

Gold Trading – It’s More Than an Investment
For those who invest in gold, it’s more than just an investment. It’s a way to protect their wealth. Basically, investment is identified as something that would result in returns against risk, which isn’t the case with gold. Gold doesn’t generate any return. Its value simply appreciates so it doesn’t account as a typical investment but more as an attempt to increase your buying power and avoid inflation. While currencies lose their value, gold retains it instead, resulting in increased wealth over time.

Trading in gold has turned out to be beneficial for almost everyone who has put their money in this metal. So, it’s safe to assume you won’t be at risk when investing in gold. However, you do need to have proper investment strategies in place before you start investing in gold. Gold acts as a perfect addition to your investment portfolio when you want safe diversification, adding more profitability than risk.