Trading Tips: How to Target 100% to 800% profits with Gold Trading in 2020.
The continuing trade tensions between the United States with China and Europe and the economic slowdown unfolding have already increased gold's value to a seven year high before the fear of the coronavirus's effect on industrial production, international trade and tourism further attracted interest in investors who are risk adverse.
Since the end of 2019, the price of Gold(XAU/USD) has already risen over $100 an ounce to settle into a range between $1,540 USD an ounce and $1,611 an ounce.
These high prices have maintained relative strength while being traded against a strong dollar.
This more than a $100 movement from the end of last year provided interested traders the opportunity to make $10,000 or more per trading lot (100 ounces of gold).
With a 1 lot size (100 ounces) trade, when gold moves $100 an ounce then that trade could profit $10,000 since the trade size multiplied by the movement equals the potential profit or risk.
Therefore a 0.10 lot trade (10 ounces) could make $1,000 on a similar $100 an ounce movement, a 10 lot trade (1,000 ounces) could make $100,000 or a 0.01 trade (1 ounce) could make $100.
To calculate how much margin these kind of trades would use, simply take the current price of gold on the trading platform ( $1,600 an ounce for example) and multiple times the trade size (100 ounces which is 1 lot for example) which would equal $160,000 then divide that by the leverage offered (100 to 1) which would equal $1,600 again.
This means since there are 100 ounces per lot and CM Trading offers 100 to 1 leverage on trading gold it is one of the easiest assets to calculate on how much margin it requires to trade. The price per ounce equals the price per lot (100 ounces) for used margin.
So, for example, if a trader with $10,000 USD opened a 1 lot trade then in this example $1,600 would be reserved for opening and maintaining the trade and $8,400 USD would remain to open new trades or support the new trade if the market moved against that trade. With 100 ounces, it would take an $84 an ounce movement against that trade to totally expose that trade.
This level of risk exposure would be the same if a trader with $1,000 of equity traded on 10 ounces or $100,000 traded with 1,000 ounces.
If a trader was willing to trade with twice the exposure ($42 an ounce movement) then they could trade twice the trade size or 2 lots (200 ounces) per $10,000 or if they wanted to trade with one half the exposure or less than 0.50 lots (50 ounces) or less would give them $168 movement exposure protection.
All trading companies will have a margin call to start closing trades when their used margin equals a certain percentage of their equity. At CMTrading the margin call starts at 20% Free Margin (Equity/divided by used Margin).
With hedge funds, analysts and investment banks predicting GOLD could reach $1,800 an ounce as early this spring or even $2,000 an ounce by America's election in November, that range could return an investor as much 100% to 800% returns based on the trading models provided above.
If you want to discuss what trade size is right for your current or future investment, you can consult with a Market Analyst.
If you do not already have a trading account you can Register now to get started.