Spot gold trading is a contract-based trading using the principle of capital leverage. According to the trading standard of the international gold margin contract, use the price of one ounce to buy the trading right of one hundred ounces of gold . Use the trading rights of these 100 ounces of gold to buy and sell, and earn the difference between the profits. And if you make up the difference, you can extract physical gold . 100 oz minimum.
what is margin
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Margin trading, also known as virtual trading and margin trading, means that investors use their own funds as a guarantee to amplify the financing provided by banks or brokers to conduct spot gold transactions , that is, to enlarge investors’ trading funds. The proportion of financing is generally determined by banks or brokers. The larger the proportion of financing, the less funds customers need to pay. The international financing multiple is also called leverage. For example: the standard contract in the market is 100,000 yuan per lot. If the leverage ratio provided by the broker is 20 times, a margin of 5,000 yuan is required for buying and selling one lot; if the leverage ratio is 100 times, then A deposit of 1,000 yuan is required to buy and sell one lot.
Gold margin trading means that in the gold trading business, market participants do not need to transfer the full amount of funds for the gold traded, but only need to pay a certain percentage of the total gold transaction amount as a performance guarantee for the physical delivery of gold. In the world gold trading, there are both gold futures margin trading and gold spot margin trading.
Gold price shorting mechanism
For example, if you expect the price of gold to rise, you can buy when the price is low, sell it when the price rises, and make a profit, right? If you expect the price of gold to fall, you can borrow some gold from someone at a high price and sell it first. After the price falls, you can buy it back at a low price and return it to someone else, so you also earn the price difference, right? Because this market is contract-based, you can sell it first and then buy it back to close the position.