How to Trade Gold Futures
WIth gold trading above $1,000 and worries about inflation and dollar devaluation, trading has intensified with average daily volumes in the NYMEX of around 250,000 contracts. One of the easiest ways to trade in gold is through futures since you don't need to actually purchase and hold the product, and the major gold futures are highly liquid.
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Instructions
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Search firms that offer gold futures trading. The Chicago Mercantile Exchange offers a list of brokers on its website.
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Select a broker that matches your needs, a perfect blend of costs, support, and news resources. Some brokers may be much cheaper than others but offer fewer "bells and whistles" that new traders may need.
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Open a futures trading account with forms from the broker's website. Send in scanned images of an ID and a proof of residence (a utility bill is usually acceptable). Make sure to fill out forms for a futures account.
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Fund the account. This can be done with a check or wire transfer.
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Find a third-party vendor If the broker doesn't offer a proprietary platform for charts and gold futures pricing. Search on the Internet for "futures trading platforms" for options. E-Signal and TradeStation are some of the more popular systems.
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Develop a trading strategy to decide when to enter and exit positions. Systems can be based on technical or fundamental analysis. Technical strategies include looking for breakouts; when a new high has been made after multiple attempts to surpass a certain price level. Fundamental strategies would include analyzing current economic news for correlation to possible future inflation.
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Make trades with your broker based on the strategy you developed.
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Tips & Warnings
Gold futures contracts come in two sizes; standard contract of 100 oz. and a mini contract of 33 oz. Margin requirements are as follows: A standard contract requires $4,500 in initial equity per contract, and a mini contract requires $1,485 in initial equity per contract.
