Gold trading is not all about buying and selling the physical asset. In fact, online trading can provide more benefits and this is where gold trading in CFD brokers comes.

Gold has always been everyone's favorite when it comes to investment. However, did you know that you can easily invest in gold without buying the physical asset? If not, you should start paying attention because trading gold as CFD offers a big deal of benefits with promising returns.

Gold CFD


Should I Trade Gold with CFD brokers?

Well, to answer this question that you probably have in mind since the very beginning, let's unpack this fact. These days, forex brokers did not only provide traders with currency trading but also connected clients to other potential markets through its CFD offering.

If you wish to trade in gold, not the physical but the online one, you should consider the offering of XAU/USD trading in forex brokers. It is just like any other trading pair like EUR/USD, GBP/USD, and so on. Meaning, you can earn profits from the price difference. The practicality in trading gold this way can be seen when you can benefit from both the price rise and fall. It's pretty much different when you're trading physical gold because you can only get a profit from the price increase.

Apart from that, there are other advantages that you may consider:


1. Accessible to Everyone

You should notice that whenever someone wants to trade their physical gold, one needs to wait until the office hour is open and go to a certain store to make a profit from gold. You certainly won't face this issue because trading gold CFD means you don't have to hold the asset in order to benefit from the price movement.

This certainly provides more access for everyone who wants to trade gold from anywhere they want. In fact, trading gold CFD can be done with just a few clicks and only need an electronic device (PC/laptop/smartphone) with a good internet connection aside from the capital that you use to open trades.


2. Cost-Effective

One thing that differentiates trading gold in CFD brokers and the traditional way of trading the physical asset is you will not get any extra costs for storing or transporting the instrument. Since everything is traded online, you can eliminate any additional cost that comes with buying or selling physical gold.


3. More Flexible

When trading gold CFDs, you don't need to wait until the price moves up to sell your asset. The high liquidity of gold CFDs allows you to take advantage of price movements whether the market is rising or falling. If you predict the price of gold will rise, you can make a long position (buy). Conversely, if you predict the gold price will move lower, you can make a short position (sell).

Gold Trading CFDs

Furthermore, trading gold in CFD brokers is more flexible because CFDs are leveraged financial products. You do not need to make a deposit of the full amount of your trade size. With leverage, you only need to make sure that you have the margin required to open a trade, which is usually 10x to 100x smaller than the actual size depending on what leverage you use. For example, if you get 50:1 leverage for a $50,000 position size, you only need to provide $1,000 as the minimum margin to open a trade. When the leverage is 100:1, you only need $500 to open a trade.


4. Liquidity

The estimated gold trading volume is around $70 billion per day, more than most currency pairs except some major currency pairs. High trading volume results in high liquidity for gold CFDs. With high liquidity, gold CFDs are cheaper to trade than other financial instruments, and the commissions charged are usually very small. In addition, selling CFD contracts is also easy due to the high liquidity, unlike what happens in physical gold transactions.

See also: Gold Price Today


5. Easy to Diversify

If you are new to trading, you might wonder what exactly is risk diversification. Any investment is not without risk and one should secure their investment in order not to lose all of their investments when a market is going down. One of the most effective ways to reduce such risk is called diversification.

To do this, you only need to divide your investment into various types of assets. So, whenever an asset price is at a disadvantage, you won't lose all your money. Trading gold in CFD brokers is fast and easy, so you don't have to go through many processes whenever you want to change from gold to other assets. In addition, gold is known as a safe haven so one may look into other riskier assets if they want to pursue higher profit opportunities during risk-on conditions.

Now that we've explored the 5 benefits of gold trading in CFD brokers, you may wonder where to start. Any forex brokers offering CFD trading basically provide the opportunity to trade gold CFD. Still, there are certain things to consider when it comes to choosing a good broker to trade gold. With the essential factors in mind, here are some recommended brokers to trade gold CFD:

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