CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69.50% of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

How to trade precious metals such as gold

Trading with CFDs does not necessarily mean that the trader is dependent only on trading currency pairs, although they are undoubtedly among the most popular in this market. CFD contracts with precious metals are also an increasingly popular trading instrument. When it comes to precious metals, most of us will certainly think of metals such as gold or silver. But make no mistake, there are other much more lucrative metals that are also part of our CFD offer, for example, palladium and platinum. And it is this article that could serve as a stepping stone for all of you who are considering trading in precious metals but lack the basic information.

Inflation - The foundations on which it all stands

The value of precious metals is based on monetary policy and related inflation. This is because the value of precious metals simply tends to increase in an inflationary environment. The reason is simple. While the amount of precious metals on our planet is limited, fiat currencies are regularly reissued (printed), which reduces their purchasing power and, on the other hand, increases the price of precious metals over time.

Obchodování zlata

Why trade CFDs and not futures?

CFD contracts are much more affordable because they can be divided into smaller units. For example, when trading gold on the futures market, the margin requirements for one whole contract are in the thousands of USD and this unit, of course, cannot be divided. So it is either everything or nothing. In contrast, in the case of CFDs, it is commonly possible to purchase volumes that are often more affordable to a trader with smaller available capital.

The importance of the currencies for which precious metals are purchased

Most traders would undoubtedly say that when it comes to trading precious metals, the “go-to” currency is the US dollar. The fact remains, however, that in the end it does not matter in which currency precious metals are bought, but a much more important question is when is the right time to buy them.The most appropriate period for purchases is generally considered to be the period of uncertainty and the times when the value of the currencies for which precious metals are purchased is quite low in relation to them. After all, it is better to buy at a time when, for example, the price of gold has fallen and there is a higher growth potential than when its value is at historical highs.

Trading or investing, which is more profitable?

Regardless of whether the trader is more in favor of short-term trading or long-term investment, it is very important that outline the rules according to which they will buy and sell over time, because if you want to minimize your risk output while scoring some good quality trades, this is the right approach.

  • Trading - the advantage of short-term and medium-term trading is that it is possible to achieve much higher annual appreciation over the years than in the case of long-term holding. On the other hand, the same goes for potential losses.
  • Investments - compared to trading, this method is much calmer, as traders do not have to regularly perform various analyzes or follow important trading reports. Simply, in this case, the trader opens his positions, but in the end, he relies on their long-term change in value, ie a change in the order of months or years.

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What forms of investments does the Purple Trading offer?
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Purple Trading offers the clients the ability to trade actively by themselves, use ETF products for long term investment or to connect their account to a selected trading strategy. 
Strategies are using signals from professional providers and it is not possible to interfere with the trading, as the trading signals are being copied to clients’ accounts. The clients may monitor their trading performance in PurpleZone and they may ask for disconnection from the strategy at any time, which is then guaranteed to be executed within the following 24 business hours. 
This service is strictly regulated and we can offer it only to clients who are aware of all the risks which this type of investment carries. The clients must meet certain conditions. This is evaluated based on the answers from the registration form, or from investment questionnaire. 
CFD - contract for difference
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It is a trading instrument; its value is derived from its underlying instrument, which can be for example a stock index or a future contract. Settlement of this instrument type is always performed financially, therefore the client speculates on future value difference of the underlying instrument while he/she does not become the owner of it.