Profiting From Gold Price Movements

 Recently gold has been significantly increasing in price as a proxy for the devaluing US dollar, and a safe haven for oil profits. The long term trend is upward - in fact gold prices have been in an uptrend since 2001. Of course, gold prices can fall as quickly as they rise.  How can you convert insight into gold price directions, or a long term view into profits?Well, gold futures are widely available on various futures exchanges.  The actual contract size varies across exchanges, but the COMEX contract size is 100 ounces of gold.  At current prices, that equates to around $78,000.  As with all futures contracts, you put up a margin.  This can vary based on market volatility, but is around $3,375.  This means that with just over $3,000, you can control nearly $80,000  worth of gold - you are leveraging your money more than 20 times.Of course, this doesn’t mean that you use every cent in your trading account to purchase every gold contract you can.  Professional traders would typically leverage their money around 10 times which means that they will hold cash of around $8,000 per contract.Before trading, you should determine whether you want to take a long or short term view of the market.  This will affect how much risk you need to take on, and how much margin you will need. If you want to trade long term trends, you will need to have plenty of margin available because there are often significant short term ups and downs in the futures market that you will need to ride out.  In particular, gold prices can move $10 per ounce or more in a single day, or multiples of that over several days.  $10 per ounce equates to $1,000 per contract because there are 100 ounces in a contract.  If you trade shorter term positions with less margin available, you’ll need to keep a close eye on the market.  When you place your order,  you need to have a point where you exit from the market at a loss.  This is a stop loss.  Avoid placing your stop loss where everyone else puts their stops - at dollar points, or at key highs and lows.  Remember, gold is a commodity like any other.  Good luck with your gold futures trading.