How to Make Money Trading Gold

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To begin with, Day trading gold and silver need to apologise for the delay in putting up this chapter. Anyway, let us get straight to work and discuss Silver.

There is a common perception that the market price of gold and silver makes similar moves. We will discuss pair trading in detail, perhaps in a different module altogether. However, let us go ahead and investigate if Gold and Silver move in tandem.

I did run day trading gold and silver correlation check on Gold and Silver using 30 minutes intraday data for the last 3 months note this is over a data points and here are the results —. The correlation on an intraday basis is 0. So what does this mean? Well, the correlation suggests that the two metals make similar moves on an intraday basis.

If the intraday correlation is as tight as 0. This will be a kind of hedged strategy as you are long and short on similar assets at the same time.

There are lots of other things to take care day trading gold and silver when you initiate such trades; more on pair trading at a later point.

If you were to just look day trading gold and silver the graph and take a call on how closely the two metals move, then chances are you would disregarded any sort of correlation day trading gold and silver them J, but the actual numbers paints a completely different picture! Longer term data will portray more meaningful information. In fact, I dug up the correlation data between silver and gold from a recent survey by Thomson Reuters, and here is what they suggest —.

The correlations are broken day trading gold and silver on a quarterly basis clearly a longer term approach here and as you can see the correlation between Gold and Silver is on average is about 0. The tight EOD correlation implies that traders and investors consider both gold and silver as safe havens in times of economic crisis.

This further implies that any global geo political tensions tend to drive the price of not just gold, but silver as well. Also, please do note the correlation of Silver with Oil, it is quite erratic and gives a sense on unreliability here. Silver has applications in industrial fabrication, photography, fashion, electrical, and electronics industries. Hence, there is always a demand for silver.

Historically, the demand for silver has grown at roughly 2. Out of the total global demand, bulk of it comes from industrial fabrication and manufacturing.

This directly suggests that the price of silver is kind of influenced by growth of manufacturing and industrial economies such as China and, to some extent, India. On the supply side, global mining production along with scarp and sovereign sales stands at The supply has not really improved over the years; in fact the data suggests that the growth in supply has just been about 1. You can read the complete survey report. Given how the supply and demand scenario plays out, there is a lot of scope to trade silver as a commodity.

This leads us back to the most important question — who decides the rate of silver? Well, silver rates are fixed the same way as that of gold, in London, by a pool of participating banks. There are four variants of silver contracts that are available for you to trade on MCX. They differ mainly in terms of contract day trading gold and silver, and therefore the margin required. These contracts are as follows —. Let us begin with the main Silver contract. The price quotation for the Silver contract is 1 kilogram.

This means when you check the price of Silver on MCX or on your trading terminal, the price that you day trading gold and silver is for 1 kg of silver. This price includes the import duties, taxes, and all the other applicable duties.

Have a look at the screenshot below taken from Kite —. The current price of Silver December Future is Rs. Since the contract is for 30 kgs lot sizethe contract value will be —.

As far as the contracts expiries are concerned, here are the set of contracts that are available to trade as of now as of Octnote all contracts expire on the 5 th of the contract month —. When the December contract expires, the December contract gets introduced to the market.

You must be aware by now that the most liquid contract to trade would be the one which has the closest expiry date. Do recall, settlement in equities is always in cash day trading gold and silver not physical. This means if you hold 10 lots of Silver and you opt for delivery then you will get delivery on kg of Silver. In order to get the delivery of the commodity, one has to express his intention to do so. This has to be done any time before 4 days to expiry.

So given that the expiry is on 5th, one has to express his intent to take delivery anytime on or before the 4th 1st, 2nd, 3rd, 4th. If you are trading with Zerodha, note that we do not allow you to get into the physical delivery of commodities. So you will be forced to close the position before 1st of the expiry month. In fact, I personally prefer to close the positions early on and not really day trading gold and silver into the physical delivery of commodities just because of the logistics involved.

Another important point to note here — while the delivery is mandatory for Silver 30 kgs contract, delivery is not mandatory for the Silver Mini and Silver Micro contracts. However, you do not have the option to cash settle the Silver 30 kg contract. The table above maps a commodity with a location, for example Silver Micro is mapped to Ahmedabad.

Ever wondered what this really means? We all know that upon expiry, the price of the day trading gold and silver in the spot market and its futures price converge to a single price point.

Now in case of equities, the underlying and its futures are traded on the same platform i. However, in case of commodities there are many different spot markets. For example, Pepper and Rubber are prominently traded in Kochi. Gold is traded in both Mumbai and Ahmedabad and so on.

Given this, upon expiry, the futures of Gold should merge with which spot price? Should it be the one in Mumbai or the one in Ahmedabad? For this exact reason, MCX has mapped each commodity with a spot market, and upon expiry the futures price will converge with the price of the designated spot market. If you are comfortable with the contract details of Silver mentioned above, then it is fairly easy to understand the day trading gold and silver silver contracts that are traded on MCX.

They vary mainly in terms of the lot size and therefore the margin requirement. The delivery option helps you decided whether you would like to take delivery of the contract or simply cash settle. As you can see, the margins required are much lesser quite naturally compared to the big silver contract.

Day trading gold and silver far as trading is concerned, similar to Gold, the Silver Fundamentals are quite complex — tracking them on a day to day basis may not really be possible and in fact is not really required.

Most traders I know trade commodities based on technical analysis. I personally think this a much better way to go about active commodity trading. On the same lines is there a link available which allows us to do the same thing for silver or gold etc. You can now do this with Zerodha Pi. Hi, Thanks for this chapter. Since gold and silver day trading gold and silver in same direction. Can I buy gold if a buy signal emerge in silver and same as can I buy silver if a buy signal emerge in gold Sir will it Good to do??

End what is tha last day of expirei month? Glad to hear that. Will be waiting for it. Meanwhile can you recommend any good source to learn pair trading. I have almost completed learning basics of it, but not getting some clarification for certain points. If at all your recommendation links might work for me.

I do plan to day trading gold and silver that sometime soon. But its a paid program, not free. Its always better to close the commodities position before expiry to avoid settlement obligation.

I mean on 5 of expiry month I can close my position, since in this not compulsory of taking physical delivery, we can do cash settlement also. I understand how gold is priced in India since our demands are met by import.

But is silver priced day trading gold and silver the same fashion? Since the supply of silver is low globally compared to the demand and we export quite a bit of silver every year with the imports falling drastically. That the maximum lots that can be pruchased in a single 1 order is ? Is there a limit by MCX, that an order above certain amount, for individual traders, would be rejected? Or per contract spec. Would a similar calculation be applicable for other commodities in MCX based on their contract specifications?

Thanks for providing quality material delivery of the contract or simply cash settle! I am still confusing …. Cash is when you pay the difference in your buy and sale price. Is there any correlation between silver and base metal like copper? Is safe to trade in that time? I cannot comment on the safety part. This really depends on how you day trading gold and silver.

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United Futures Trading Company, Inc. Suite Chicago, IL Gold was first found and used by prehistoric man as a tool. The1st known use of gold was in parts of central and eastern Europe, in BC.

Highly worldly gold art commodities and jewelry dating back to around BC have been discovered by archaeologists in the Sumerian Royal Tombs at Ur, in what is now The southern part of Iraq. The Egyptians used gold to embellish their kings in life and death and, by BC, gold had become a standard medium of intercontinental trade. Similarly, goldsmiths of the Chavin civilization in South America were making ornaments by hammering and embossing gold by BC.

About BC, the Greeks began to use gold coins and minted their own money in order to conduct trade between states. The rarity and metallic properties of gold made it the ideal choice in the development of currency.

Currency has remained one of gold's first and foremost uses. It is considered so valuable that we measure all other values by it. Gold will always be considered to be a safe form of financial security, many preferring to hold. Trading Unit troy ounces. Trading Months for Gold Trading is conducted for delivery during the current calendar month; the next 2 calendar months; any Feb, Apr, Aug, and Oct, falling within a month period; and any Jun and Dec falling within a sixty-month period beginning with the current month.

Last Trading Day Trading terminates at the close of business on the third to last business day of the maturing delivery month. Position Accountability Levels and Limits Any 1 mo. Six thousand net futures equivalent, but not to exceed three thousand in the spot month. Delivery Gold delivered against the futures contract must bear a serial number and identifying stamp of a refiner approved and listed by the Exchange.

Delivery must be made from a depository licensed by the Exchange. Two minutes after either of the two most active months trades at the limit, trades in all months of futures and options will cease for a fifteen-minute period.

Trading will also cease if either of the two active months is bid at the upper limit or offered at the lower limit for two minutes without trading. Trading will not cease if the limit is reached during the final twenty minutes of a day's trading.

If the limit is reached during the final half hour of trading, trading will resume no later than ten minutes before the normal closing time. When trading resumes after a cessation of trading, the price limits will be expanded by increments of one hundred percent.

Delivery Period The 1st delivery day is the 1st business day of the delivery month; the last delivery day is the last business day of the delivery month. Exchange of Futures for Physicals EFP The buyer or seller may exchange a futures position for a physical position of equal quantity.

EFPs may be used to either initiate or liquidate a futures position. A list of approved refiners and assayers is available from the Exchange upon request.

Margin Requirements Margins are required for open futures positions. Silver has been known by mankind since Prehistoric times, and its discovery is estimated to have happened shortly after the discovery of copper and gold.

The oldest record associating the element appears in the book of Genesis. The Egyptians considered gold to be a perfect metal, and gave it the symbol of a circle. Since silver was the closest to gold in perfection, it was given the symbol of a half circle. Later this semi-circle led to a growing lunar symbol, probably due to the likeness between the shining metal and the moon glow.

The Romans called silver argentum, keeping this as the intercontinental name of the element, from where its chemical symbol derives. Just as gold , silver was considered by the Ancients as an almost sacred metal, of extremely restricted use. Its assent made it ideal for ornamental purposes. It was also used for paying debts, and religious places decoration and as utensils of the wealthiest houses. Trading Unit 5, troy ounces.

Trading Months Trading is conducted for delivery during the current calendar month; the next two calendar months; any Jan, March, May, and Sept falling within a month period; and any Jul and Dec falling within a month period beginning with the current month.

After-hours electronic trading begins at 2: On Sundays, the session begins at 7: Minimum Price Fluctuation Price changes for outright transactions, including EFPs, are in multiples of one-half cent 0. For straddle or spread transactions, as well as the determination of settlement prices, the price changes are registered in multiples of one-tenth of a cent 0. Two minutes after either of the two most active months trades at the limit, trades in all months of futures and options will cease for a minute period.

Trading will not cease if the limit is reached during the final 20 minutes of a day's trading. If the limit is reached during the final half hour of trading, trading will resume no later than 10 minutes before the normal closing time. Last Trading Day Trading terminates at the close of business on the 3rd to last business day of the maturing delivery month. Delivery Silver delivered against the futures contract must bear a serial number and identifying stamp of a refiner's officially listed brand.

Delivery must be must be made from a warehouse or vault licensed or designated by the Exchange specifically for the storage of silver. Delivery Period The first delivery day is the 1st business day of the delivery month; the last delivery day is the last business day of the delivery month.

Exchange of Futures for Physicals EFP The buyer or seller may exchange a futures position for a physical position of equal quantity by submitting a notice to the Exchange.

Past performance is not indicative of future results. Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading. All trading rates quoted per side. Applicable exchange, regulatory, and brokerage fees apply to rates shown.

Please email webmaster unitedfutures. Open An Account Now Online! Gold and Silver Futures.