Gold is one of the most popular commodities among retail traders. Nevertheless, for many years, the high margin requirements and the multiple authorisations to have access to the gold exchanges kept retail traders away from the commodity. Not so long ago, margin requirements to trade gold were starting at 10’000 US dollars and traders were still facing a huge risk on their position considering the daily volatility of the precious metal.
Gold is the King of Precious Metals
So why do retail traders love gold so much? Well first, it is symbolic! For centuries, gold has been the representation of power and safety. From the Incas civilisation to the El Dorado myth, gold has been fuelling many fantasies that have led our society to place a symbolic value attached to gold. For many investors, gold is also what is called a safe-haven. A safe haven is an asset that holds and even performs in periods of uncertainty and high volatility on the market. During decades Gold is one of the safest assets and it is often one of the best investments during times of economic instability.
Trading Gold is now Possible for Everyone
Gold has since become more accessible for retail traders thanks to the creation of CFDs, Gold ETF and binary options. Indeed, the margin requirements to trade gold have dropped significantly and you can now speculate on the daily variations of the commodity price. While gold is a safe asset on the long term, it is an asset with a significant daily volatility (from 1’000 to 10’000 pips), which makes it the perfect candidate for binary options. An appropriate gold binary option can help you leverage this daily volatility and generate high returns in a short amount of time. The binary options market provides a way out to trade gold in a controlled environment, with reduced risk of a catastrophic loss, smaller margin requirements and by consequence, lower trading capital needs.
Trading Binary Options on Gold – The Advantages
There are multiple advantages to trade gold binary options. The first is that traders can thus have a complete control over their losses. They cannot lose more than their invested amount. Traders do not have to worry about margin/leverage and they can trade with a smaller capital. Most binary option brokers propose to trade binary option on gold with minimum trade size as little as $10 and payouts in the range of 75% to 85%. Gold is usually traded via traditional high / low binary options and touch/no touch options. Considering the elevated daily liquidity of the commodity, a touch / no touch option can simply enable you to reach payouts up to 500%.
How to Trade Gold Binary Options ?
Trading gold is pretty easy! This is another reason why gold is so popular among retail investors. Gold is a proxy for the value of the US Dollar and the uncertainty of the economy. Being denominated in USD everywhere in the world, the price of gold tends to go up when the value of the dollar goes down. It just means that you need more dollars to buy the same quantity of gold.
Being a safe-haven, the price of gold also tends to go up when there are rising uncertainties about the economy. This uncertainty can come from the price of oil as well as geopolitical tensions or extreme environmental conditions. In all these situations, the price of oil would go up. On the contrary, when the economy is performing and when macro indicators accurately match expectations, the price of the precious metal tends to go down as investors prefer to invest in riskier and more performing assets.
Gold Binary Option Brokers
All our recommended brokers propose binary options on Gold. AnyOption is the broker that proposes the longest maturities on Gold while OptionRally offers an intuitive platform that can displays candlestick graphs (which is always a must for trading gold).
Don’t hesitate to have a look at our detailed reviews of the best binary option brokers in Europe and use our secured links to benefit from additional advantages.