Get started

CFD

GOLD is still Strong 🥇Hello TradingView Family / Fellow Traders. This is Richard, also known as theSignalyst. Gold has been overall bullish trading inside the rising channel in red and it is currently retesting the lower red trendline. Moreover, the orange zone is a previous major high turned into a potential support. 🏹 So the highlighted purple circle is a strong area to look for buy setups as it is the intersection of the orange support and red brown trendline. (acting as non-horizontal support) As per my trading style: As GOLD is sitting around the lower the purple circle zone, I will be looking for bullish reversal setups (like a double bottom pattern, trendline break , and so on...) UNLESS the lower red trendline is broken downward, then the bears would take over for a deeper correction. 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Rich
OANDA:XAUUSD
by TheSignalyst
6
CFD,FUTURES,OPTIONS. WHAT IS THE DIFFERENCE ?🔷CFD Contacts Contract for Difference is referred to as CFD. It is a type of financial contract that enables traders to make predictions about price changes in a variety of underlying assets, such as indices, equities, and commodities, without actually holding such assets. A contract for difference (CFD) is an arrangement between two parties, usually a trader and a broker, to exchange the variation in the value of an underlying asset between the opening and closing dates of the contract. The trader will make money if the asset's price rises during that time; if it falls, they will lose money. Compared to traditional trading methods, CFD trading has a number of benefits, including cheaper transaction costs, the option to trade on leverage, and the opportunity to profit from both rising and falling markets. It does, however, come with dangers, including those related to leverage and market volatility, which, if not effectively managed, can cause large losses. It is significant to remember that not all nations permit CFD trading, and local restrictions may differ. Before beginning CFD trading, traders should speak with their broker and get professional assistance. Advantages: 1:High Leverage: CFD trading offers high leverage, which means that traders can control a larger position with a smaller investment. This can potentially result in larger profits. 2:Access to Various Markets: CFD trading provides access to a wide range of markets, such as stocks, indices, commodities, and currencies, allowing traders to diversify their portfolio and take advantage of different trading opportunities. 3:No Ownership of the Underlying Asset: CFD trading allows traders to speculate on the price movements of an underlying asset without actually owning it. This means that traders can benefit from the price movements of an asset without incurring the costs associated with owning it. 4:Short Selling: CFD trading allows traders to profit from falling markets by selling the asset short, which is not possible in traditional trading. 5:Lower Transaction Costs: CFD trading involves lower transaction costs compared to traditional trading methods, such as buying and selling stocks through a broker. Disadvantages: 1:High Risk: CFD trading is associated with high risk due to the high leverage and market volatility. Traders can potentially lose more than their initial investment. 2:Complexity: CFD trading involves complex financial instruments, which can be difficult for new traders to understand. 3:Limited Regulation: CFD trading is not regulated in all jurisdictions, which can expose traders to unscrupulous brokers and fraudulent activities. 4:Overnight Financing Charges: CFD trading involves overnight financing charges, which can eat into a trader's profits if positions are held for an extended period. 5:Counterparty Risk: CFD trading involves counterparty risk, which means that traders are exposed to the financial stability of their broker. If the broker goes bankrupt, the trader may lose their investment. 🔷Futures Contacts Financial contracts known as futures contracts allow two parties to buy or sell an underlying asset at a fixed price and later date. A commodity, currency, stock index, or other financial instrument could be the underlying asset. On regulated markets like the Chicago Mercantile Exchange (CME) or the New York Mercantile Exchange (NYMEX), futures contracts are standardized and exchanged. The exchanges serve as go-betweens between buyers and sellers and offer a clear trading environment for futures contracts. A futures contract's buyer commits to buying the underlying asset at a predetermined price and later date. On the other side, the seller consents to provide the underlying asset at the agreed-upon cost and time. Traders and investors utilize futures contracts for hedging or speculative objectives. By fixing a price for future delivery, hedges use futures contracts to guard against changes in the underlying asset's price. Conversely, investors utilize futures contracts to profit from changes in the price of the underlying item without really holding it. Advantages: 1:Price Discovery: Futures trading provides a transparent and efficient marketplace for discovering the price of the underlying asset, which benefits traders and investors. 2:Liquidity: Futures contracts are highly liquid and traded on organized exchanges, which makes it easier to enter and exit positions at any time. 3:Standardization: Futures contracts are standardized, which means that they have a uniform size, settlement date, and other specifications. This allows traders to easily compare prices and make informed trading decisions. 4:Hedging: Futures contracts are commonly used by producers and consumers of commodities to hedge against price fluctuations. By locking in a price for future delivery, they can reduce their exposure to price risk. 5:Leverage: Futures contracts offer high leverage, which allows traders to control a large position with a relatively small amount of capital. This can potentially result in significant profits. Disadvantages: 1;High Risk: Futures trading is associated with high risk due to the high leverage and market volatility. Traders can potentially lose more than their initial investment. 2:Complexity: Futures trading involves complex financial instruments, which can be difficult for new traders to understand. 3:Margin Calls: Futures trading requires traders to maintain a certain level of margin in their trading account. If the account falls below this level, traders may receive a margin call and be required to deposit additional funds or close out positions. 4:Counterparty Risk: Futures trading involves counterparty risk, which means that traders are exposed to the financial stability of their broker. If the broker goes bankrupt, the trader may lose their investment. 5:Market Manipulation: Futures markets can be subject to market manipulation, which can distort prices and harm traders and investors. It is important for traders to be aware of this risk and to monitor market conditions closely. 🔷Options Contacts Financial arrangements known as option contracts between two parties grant the buyer the right, but not the duty, to purchase or sell the underlying asset at a defined price and date in the future. A stock, commodity, money, or other financial instrument could be the underlying asset. Call options and put options are the two basic categories of option contracts. In contrast to put options, which offer the buyer the right to sell the underlying asset at a predetermined price, calls give the buyer the right to purchase the underlying asset at a predetermined price. On regulated markets like the Chicago Board Options Exchange (CBOE) or the International Securities Exchange (ISE), option contracts are exchanged. The exchanges serve as go-betweens between buyers and sellers and offer a clear trading environment for option contracts. Traders and investors utilize option contracts for hedging or speculating objectives. Hedgers use option contracts to hedge against changes in the underlying asset's price, whereas speculators use them to profit from changes in the asset's price without actually holding it. Option trading is highly risky and necessitates a solid trading plan. Before engaging in option trading, it's critical for traders and investors to understand the dangers involved. Advantages: 1:Limited Risk: Buying options contracts limits the potential loss to the premium paid for the contract, while selling options contracts can also limit the potential loss to a certain extent. 2:High Potential Returns: Options contracts offer high leverage, which allows traders to control a large position with a relatively small amount of capital. This can potentially result in significant profits. 3:Flexibility: Options contracts provide traders with a high degree of flexibility, as they can be used for a variety of trading strategies, including hedging and speculation. 4:Hedging: Options contracts can be used to hedge against price fluctuations of the underlying asset. By buying put options or selling call options, traders can reduce their exposure to price risk. 5:Variety: Options contracts are available on a wide range of underlying assets, including stocks, commodities, currencies, and indexes. This allows traders to take advantage of different market conditions and diversify their portfolio. Disadvantages: 1:High Risk: Options trading is associated with high risk due to the high leverage and market volatility. Traders can potentially lose more than their initial investment. 2:Complexity: Options trading involves complex financial instruments, which can be difficult for new traders to understand. 3:Time Decay: Options contracts have an expiration date, after which they become worthless. This means that traders need to be correct about the direction of the underlying asset and the timing of the price movement. 4:Margin Requirements: Options trading requires traders to maintain a certain level of margin in their trading account. If the account falls below this level, traders may receive a margin call and be required to deposit additional funds or close out positions. 5:Illiquid Markets: Options contracts on less popular underlying assets may have low trading volume and liquidity, which can make it difficult to enter or exit positions at desired prices
COINBASE:ETHUSDEducation
by ChristopherDownie
Five Reasons and Six Ways to Invest in Gold"Gold is money. Everything else is credit.", said John Pierpont Morgan. When borrowers default, markets collapse and banks run into crisis, gold prices skyrocket. Gold is trading at a 12-month high on March 18th. Gold has been valued for thousands of years. Gold has unique properties. It has been enchanting women and men since humans set foot on the planet. Polycrisis. That aptly describes the current times. The US regional bank crisis haunts markets. Credit Suisse - the bank to the wealthiest was so frail that Swiss National Bank had to step in to provide liquidity backstop. Regulators worked over the weekend to broker an acquisition by UBS to prevent a banking crisis from spreading. Inflation is raging hot at levels unseen in 40+ years. Compounding Chair Powell's quagmire, the US Fed has been forced to switch from QT to QE by providing support to its regional banks from collapsing under crisis of confidence. Geo-politics remains tricky. In times of crisis, investors seek flight to safety. Safest of all assets since civilisation began has been gold. This educational piece provides an overview of (a) physical gold market dynamics, (b) largest holders of gold reserves, and (c) gold price behaviour against other asset classes. It also describes five primary reasons for investing in gold, contrasts six methods of doing so, and highlights the downsides of holding gold. PHYSICAL GOLD DYNAMICS Gold performs multiple functions. It is a currency to some. Store of wealth to others. It is an industrial metal used in consumer electronics. The rich love gold in clothing and food. A bird's eye view of physical gold can be summarily described in three parts: 1. Consumers : Gold is used in consumer electronics due to its high conductivity and low corrosive properties. Gold used as industrial metal represents 6%-8% of total demand. Unsurprisingly, >50% of global gold demand is for jewellery. Jewellery is a multi-tasker. It meets aesthetic goals, serves as a status symbol while also being a form of investment. 2. Gold Reserves : Central banks hold gold as reserves. They are the most significant holders of gold. The haven nature of gold compels central banks to increase holdings during economic uncertainty, high inflation, or currency devaluation. Central Banks added >382 tonnes to their reserves in 2022. 3. Producers : Gold mining is a cyclical industry. Mining output has been in decline over the past decade as major gold producers shift to mining minerals and other metals like copper with the proliferation of lithium-ion batteries in EVs. Gold mining took a huge output hit during the pandemic and may not recover any time soon as capital expenditure into new gold mines is limited. GOLD RESERVES - THE MOVERS AND SHAKERS According to the World Gold Council, as of end 2022, central banks in Western European (11.8k tons) have the largest gold reserves followed by North Americans (8.1k tons), Central & Eastern Europeans (3.5k tons), and East Asians (3.4k tons). Last year, central banks of Turkey, China, Egypt, Qatar, and Uzbekistan were the largest buyers of gold. FIVE REASONS WHY GOLD SHOULD BE IN INVESTMENT PORTFOLIOS Gold is a resilient store of wealth, provides meaningful portfolio diversification, has limited price volatility, extends benefits of hedge against inflation & currency debasement, and is limited in supply. 1. Resilient Store of Wealth Gold outperforms equities during periods of economic instability. Due to its material properties and scarcity, it can even become more valuable during such periods as investors seek shelter in classic risk-off assets such as gold. 2. Portfolio Diversification Gold can have both positive and negative correlation with other asset classes during different periods. This makes it an attractive addition to a diversified portfolio. 3. Limited Volatility Due to its large market size and diverse supply origins, gold is less volatile than equities and other asset classes making it a safer asset class for investors. 4. Inflation Hedge Gold is often seen as an inflation hedge. Which means that it can maintain its value or appreciate during periods of high inflation due to its scarcity and safety. However, in some cases monetary policy changes like interest rate hikes may make gold a less attractive investment compared to treasury yields during inflationary periods. 5. Limited in supply Gold is a finite resource, that too, one of the rarest precious metals in the world. Moreover, more than 200,000 tonnes of gold have already been dug up. This represents more than half of the total reserves. The gold that is yet to be mined is much more difficult to extract economically. Scarcity creates rarity, which in turn drives the value of the existing gold higher. Many governments, banks, and people also use gold as a long-term investment, which means a huge portion of the gold supply is taken out of circulation, shrinking available supply even more. SIX WAYS OF INVESTING IN GOLD There are multiple ways of investing in gold. Six primary ones are: 1. Physical Gold : Gold can be bought and stored in the form of jewellery or gold bars. Costs of storage, insurance and making charges can be substantial and also inconvenient. Investing in physical gold is not optimal for reasons of poor convenience and higher transaction costs. 2. Gold ETF : Exposure to gold can also be acquired through buying exchange traded funds (ETF) backed by physical gold. There are multiple ETFs that track physical gold prices. The SPDR Gold Shares ETF (GLD) was the pioneer and began trading in 2004. It has an expense ratio of 0.4% and tracks gold bullion prices. GLD holds both physical gold bullion and cash. GLD provides a liquid lower-cost method to buy and hold gold. Gold can be bought and sold during the trading day at market price. Investors must pay heed to taxation as gains from ETFs in some jurisdictions can be treated differently compared to other forms of gold. 3. Gold Futures : CME’s COMEX Gold futures is the world’s most liquid derivatives which enables capital efficient exposure to Gold. With round the clock liquidity, tight bid-ask spread and benefits of a cleared contract, investing through COMEX Gold futures is widely popular. Each lot of COMEX Gold Futures provides exposure to 100 oz of Gold. Enabling affordable access to investors and to facilitate accurate granular hedging, CME also offers Micro Gold Futures. Each lot of Micro Gold contract provides exposure to 10 oz of Gold. 4. Gold Options : CME also offers options on Gold Futures. Gold options is a useful investing and hedging tool. Using options, investors can lock in unlimited upside potential of price moves while limiting the adverse impact of downside price moves. 5. Shares of Gold Producers : Gold mining is an international business. Gold is mined on every continent except Antarctica. Top gold miners include Newmont (USA), Barrick (Canada), Anglogold Ashanti (South Africa), Kinross (Canada), Gold Fields (South Africa), Newcrest (Australia), Agnica Eagle (Canada), Polyus (Russia), Polymetal (Russia), and Harmony (South Africa). As is evident from the chart above, investing in gold miners for exposure to gold is a poor proxy as most of them have underperformed relative to gold prices. Furthermore, FX exposures must be hedged separately for some stocks which trade in emerging markets. In summary, securing gold exposure through miners is not optimal relative to other alternatives. 6. Gold CFDs : CFDs also known as contract for differences allows for synthetic access to the price of spot gold. These CFDs are OTC derivatives contracts which carry non-trivial counterparty risk with investors being exposed to the credit risk of the CFD provider. The table below summarises the merits of various gold investment instruments across key investment attributes. GOLD TOO HAS ITS DOWNSIDES Gold is a non-yielding asset. Shares of profitable companies pay dividends. Holding debt earns interest. Real estate delivers rents. But gold provides zero yield. For every problem, innovation in markets provides a solution. In a future paper, Mint Finance will demonstrate how gold can be transformed into a yield generating asset. Rising interest rates are headwinds to gold. As rates on treasury, bonds and deposits rise, investors rotate their money out of gold and into yield generating assets. Not only is gold non-yielding, but the returns also fade into insignificance relative to gains from innovation. In times of crisis, gold is a great hedge. However, while positioning portfolios for the long term, investors must astutely balance between safety versus growth. GOLD RETURNS IN RELATION TO OTHER ASSET CLASSES 1. US Equities and Emerging Markets Gold outperforms equities during periods of crisis. During equity bull runs, gold underperforms equities. Cumulatively, over the last 20 years, Gold has outperformed Dow Jones, S&P 500, and MSCI Emerging Markets. Only Nasdaq, which represents tech, innovation and growth has surpassed gold returns. 2. Treasuries with 2-Year and 10-Year Maturities Unsurprisingly, when sovereign risks rise and treasury yields fall to zero, gold shines. Between two non-yielding assets, investors prefer to take shelter in gold as a preferred haven. However, when rates rise, investors rotate out of gold and into treasuries. 3. Crude Oil, Copper, and Silver Over the last two decades, Gold has outperformed crude oil, copper, and silver. 4. Dollar Index, Bitcoin and Ethereum While US Dollar and gold are both global reserves, gold has outperformed the Dollar Index which is the value of the USD against a basket of six international currencies. However, relative to bitcoin and ethereum, gold pales into insignificance. Bitcoin is perceived as millennial gold and ethereum is the millennial oil. Both assets have obliterated gold in terms of price returns. 5. Major Currencies Over the last 3 years, as markets emerged out of the pandemic, gold has outperformed all the major currencies. Yen, under the influence of Governor Kuroda’s liberal QE program, has depreciated 63% against gold. Indian Rupee has deflated 47% while Euro and Sterling have shed 38% and 32% against gold. The US Dollar, Chinese Renminbi, and Aussie Dollar have depreciated 31%, 29% and 20% against gold, respectively. Key Takeaways Gold is money. Everything else is credit. Gold glows in crisis. It is a knight in shining armour for investors. Gold is the only asset which exhibits negative correlation. These are times of polycrisis. As investors seek flight to safety from banks even, gold is the safest among the few remaining alternatives. Gold is a resilient store of wealth, offers durable diversification within a portfolio, exhibits much lower volatility relative to equities, and serves as an inflation hedge albeit with less than a perfect record. Clients can invest in gold in multiple ways. Gold futures is the most convenient and optimal among the six alternatives. Gold has its downsides. It is a non-yielding asset and performs dismally against innovation and growth. Except for Nasdaq, bitcoin and ethereum, gold has outperformed currency majors, equity indices, US treasury, and commodities. In a future paper, Mint Finance will explore ways in which gold can be transformed into a yield generating asset. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation, or needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of future performance. All examples used in this workshop are hypothetical and are used for explanation purposes only. Contents in this material is not investment advice and/or may or may not be the results of actual market experience. Mint Finance does not endorse or shall not be liable for the content of information provided by third parties. Use of and/or reliance on such information is entirely at the reader’s own risk. These materials are not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Mint Finance to any registration or licensing requirement.
COMEX:GC1!Education
by mintdotfinance
33
GOLD - Wait For The Bulls!Hello TradingView Family / Fellow Traders. This is Richard, as known as theSignalyst. on WEEKLY: Left Chart GOLD is approaching a support zone and round number 1800. So we will be looking for buy setups on lower timeframes. on H1: Right Chart XAUUSD is bearish from a short-term perspective trading inside the falling red channel. 🏹 Trigger => for the bulls to take over, we need a new swing high to form around the upper red trendline and then a break above it. Meanwhile, until the buy is activated, GOLD can still trade lower till the 1800 support. 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Rich
OANDA:XAUUSD
by TheSignalyst
13
EXPLAINED: Gearing and how it worksThere is one tool with trading, which you can accelerate your portfolio, compared to with investing. I’m talking about Gearing (or leverage). To wrap our head around this concept, here’s a more relatable life example. When you buy a house for R1,000,000, it is very similar to trading derivatives. Initially, the homeowner most probably won’t have the full R1,000,000 to buy the house with just one purchase. Instead, they’ll sign a bond agreement, make a 10% deposit (R100,000), borrow the rest from the bank and be exposed to the full purchase price of the home. This is a similar concept for when you trade with gearing. Gearing is a tool which allows you to pay a small amount of money (deposit) in order to gain control and be exposed to a larger sum of money. You’ll simply buy a contract of the underlying share, use borrowed money to trade with and be exposed to the full share’s value. Let’s simplify this with a more relatable life example: How gearing works with CFDs Let’s say you want to buy 1,000 shares of Jimbo’s Group Ltd at R50 per share as you believe the share price is going to go up to R60 in the next three months. You’ll need to pay the entire R50,000 to own the full value of the 1,000 shares (R50 X 1,000 shares). In three months’ time, if the share price hits R60 you’ll then be exposed to R60,000 (1,000 shares X R60 per share). Note: I’ve excluded trading costs for simplicity purposes throughout this section If you sold all your shares, you’ll be up R10,000 profit (R60,000 – R50,000). The problem is you had to pay the full R50,000 to be exposed to those 1,000 shares. When you trade a geared instrument like CFDs, you won’t ever have to worry about paying the full value of a share again. A CFD is an unlisted over-the-counter financial derivative contract between two parties to exchange the price difference of the opening and closing price of the underlying asset. Let’s break that down into an easy-to-understand definition. A CFD (Contract For Difference) is an Unlisted (You don’t trade through an exchange) Over The Counter (Via a private dealer or market maker) Financial derivative contract (Value from the underlying market) Between two parties (The buyer and seller) to Exchange the Price difference of the opening and closing price of the Underlying asset (Instrument the CFD price is based on) Let’s use an example of a company called Jimbo’s Group Ltd, who offers the function to trade CFDs. The initial margin (deposit) requirement is 10% of the share’s value. This means, you’ll pay R5.00 per CFD instead of R50, and you’ll be exposed to the full value of the share. To calculate the gearing (or leverage ratio) you’ll simply divide what you’ll be exposed to over the initial margin deposit. Here’s the gearing calculation on a per CFD basis: Gearing = (Exposure per share ÷ Initial deposit per CFD) = (R50 per share ÷ R5.00 per CFD) = 10 times gearing This means two things… #1. For every one Jimbo’s Group Ltd CFD you buy for R5.00 per CFD, you’ll be exposed to 10 times more (the full value of the share). #2. For every one cent the share rises or falls, you’ll gain or lose 10 cents. To have the exposure of the full 1,000 shares of Jimbo’s Group Ltd, you’ll simply need to buy 1,000 CFDs. This will require a deposit of R5,000 (1,000 CFDs X R5.00 per CFD). With a 10% margin deposit (R5,000), you’d have the exact same exposure as you’d have with a conventional R50,000 shares’ investment. Here is the calculation you can use to work out the exposure of the trade. Overall trade exposure = (Total initial margin X Gearing) = (R5,000 X 10 times) = R50,000 With an initial deposit of R5,000 and with a gearing of 10 times, you’ll be exposed to the full R50,000 worth of shares. In three months’ if the share price reaches R60, your new overall trade exposure will be R60,000 worth of shares (1,000 shares X R60 per share). If you sold all of your positions, you’d bank a R10,000 gain (R60,000 – R50,000). But remember, you only deposited R5,000 into your trade and not the full R50,000. This is the beauty of trading geared derivative instruments. If you want any other technical trading or fundamental term explained, please comment below. I'm happy to help. Trade well, live free Timon MATI Trader Feel free to follow my socials below.
JSE:J200Education
by Timonrosso