With the price of gold reaching all-time highs, many traders are wondering if trading gold is a great way to earn extra profits. One way to do this is to trade the gold futures contract. This is where you speculate that the price of gold will rise or fall in the future. Historically, gold has been an excellent long-term investment during times of economic uncertainty or crisis. Given that the world is currently in a financial crisis and many international tensions are erupting, gold shows why it is such a good investment in times of great challenges.
There are many ways to profit from the up and down movements in the price of gold. One way is to play the long side, which is where you speculate that prices will rise in the future. Another way is to play the short side, which is when you speculate that prices will go down in the future. When you go to trade any of the different commodities, it is important to pay attention to the tick that occurs.
This is where when the futures contract is bought or shorted, it results in a positive tick or a negative tick. What you want to do is enter a position on a negative tick if you plan to be long or a positive tick on the short side, helping you enter the futures contract at the right time. A common strategy used to trade gold is the straddle, which is where you go both long and short. The idea is to buy both contracts at the same price and within the same time frame so that you can take advantage of the volatility to make money.
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