By Nik Kalsi & Phil Carr
After months of stability, the precious metals markets are becoming volatile again, thanks to turmoil in Europe and growing concerns over the United States looming fiscal cliff. In our opinion, neither of these situations is likely to be resolved anytime soon – therefore volatility is here to stay.
As professional Gold and Silver Traders our number one objective is to make a profit. Trading in volatile markets provides extraordinary opportunities to make money, but it also carries risk. If you are going to trade in volatile markets, you need to know how to recognize the warning signs and navigate through the storm. You have to be able to manage risk if you want to take advantage of substantial price moves that lead to the potential gains.
Volatility Is Here To Stay
In financial markets, prices can move quickly and unexpectedly, driven by factors such as economic news, earnings announcements, political changes, or natural disasters. All of which we recently experienced with U.S Presidential Elections, Hurricane Sandy, better than expected US Employment Data and of course the on-going Eurozone crisis.
Focusing on the U.S Presidential Elections as an example; Gold price put on a spectacular display last week, as investors made relocations in their portfolios after the re-election of Barack Obama as the 44th President of The United States of America. Prior to Election Day (Monday 5th November), gold price got as low as $1670, but didn't stay there for long. Within a day of Barack Obama being re-elected, gold price rose to finally close the week at $1730 per ounce. That's a bottom-to-top move of nearly 4% in a week.
Elsewhere on the markets, as the news broke – U.S Stock and Equities markets plummeted. The Dow Jones dropped 121.41 points, or 0.94 percent to 12,811.32, Standard & Poor’s 500 Index fell by 0.99 percent or 13.82 points to 1,380.71 and the NASDAQ shed 41.70 points or 1.42 percent to 2902.10
Now, gold is seen as a safe haven amid the undergoing concerns related to the upcoming so-called "fiscal cliff" worth $600 billion of tax increases and spending cuts in 2013. If that is allowed to happen the country will see the equivalent of 5% of GDP removed from the economy. This is likely to weigh on U.S growth, unemployment and weaken the dollar.
Hence, the Fed is likely to continue with its stimulus policy to spur growth and give a strong impetus to the vulnerable labour market, thereby enhancing investor demand for Gold & Silver as a hedge against inflation.
Why Fixed Odds?
Fixed Odds trading is much better suited to trading volatile markets compared to other options available to retail traders, such as spread betting or CFD’s. Especially in times of market turbulence when traditional long/short strategies often struggle to show profits.
Fixed odds’ trading is the most simplest ways to trade the financial markets. You simply purchase the contract that closely matches the likely outcome of your analysis and set how long you want it to run for. Once the contract is purchase you simply sit back and wait for the contract expiry time to be reached.
This ‘set and forget’ style of trading means you don’t have to worry about stop loss levels or price targets and there is no need to constantly monitor your open positions. Once the contract expiry time is reached you will receive the pay-out, if your price prediction is correct. You are then instantly credited with the profit directly into your account. It’s that simple!
Tips For Making A Profit With Fixed Odds Trading
Be Selective – In volatile market conditions, traders are often tempted to place an increase in trades as the market is going wild and they want to take advantage of all the trading opportunities. It is important to remember that in volatile times, losses are likely to be big. Trade the markets you know because it helps knowing what is causing volatility such as economic news, earnings announcements or simple supply and demand.
Have A Strategy – Given the limitless opportunities provided by the markets on a daily basis it’s important to have a strategy when trading. You must plan your trades and trade your strategy.
Trading blind or buying on a whim is senseless. In fact it’s not trading, it’s gambling, you need a plan. Once you have a strategy, stick to it and don’t deviate from it. This requires discipline. If you can do this, you instantly increase your chances of success.
Manage Your Risk – Like all forms of financial trading it is worth remembering that you are always at the mercy of the markets. An advantage of trading with Fixed Odds is you know your risk up front and there are no hidden surprises. Before placing a trade, you choice the amount you are willing to risk. We advise that should be no more than 5 per cent of the total value of your portfolio per trade. Therefore no matter what happens to the market while you position is open, you can never lose more than that amount.
Find High Fixed Payouts – Fixed odds trades offer payouts often several times the contract price. These high returns can also be made over short time periods. The exact payout you will be offered will depend on the market and the criteria you set on the fixed odds trade.
Most of the available trade types work on a 'time and duration' basis. This means that the longer the position is held open for the higher the return you will receive on a successful expiry. On some trades you are able to adjust the price level. This can be used to increase or decrease the risk and return on the position. Some of the most profitable we trades we have previously found offered 1:10 risk to reward ratios i.e. risking £100 to make £1,000 usually over a 7 to 10 day period.
How to Get Started?
Whether you’re a beginner or an experienced trader, there is a lot to be said about the benefits of fixed-odds trading. So why miss out? Sign up for an account with BetOnMarkets.com via the following link and get a FREE £20 to place your first no-risk trade on us: info.betonmarkets.com/bomgsc
Nik Kalsi and Phil Carr are recognised as leading authorities on Gold & Silver trading and investing. They are the founders of thegoldandsilverclub.com and professional commodities traders.
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