When a commodity like say gold is traded in the commodity market, it is exposed to price volatility. This happens for a number of reasons, mainly due to the demand and supply of the metal. When there is more demand for the metal, its price increases and vice versa. However, the change in price is not uniform.
Hence, there are multiple price levels at which you can buy or sell gold on a particular day. While you can stay glued to your screens tracking today’s gold rate Proddatur or Himachal it won’t do you much good unless you understand how the pros take advantage of price fluctuations. To put it simply, in order to take advantage of this situation, one needs to be able to predict the probable trend in gold prices with reasonable accuracy. To do this efficiently and effectively, one needs to be well versed with technical analysis techniques.
The following are a few tips on how you can use technical analysis techniques to understand gold price movements and earn profits:
You can either choose to buy physical gold or opt for financial instruments like ETFs (Exchange Traded Funds), ETNs (Exchange Traded Notes), futures or certificates that allow you to trade in gold without physically owning them. Physical gold requires safe storage and also involves shipping costs whereas trading through financial instruments saves money on shipping charges and storage costs but they usually carry more risk than physical storage.
Calculate daily fluctuation percentage:
must calculate the daily fluctuation percentage by dividing the difference between today’s closing price and yesterday’s closing price over yesterday’s closing price. Then multiply that figure by 100. For example, if today’s closing price is Rs 30000/- per 10 grams against yesterday’s closing of Rs 29000/- then the daily fluctuation percentage would be 3% (not 0.03%). The daily fluctuation per cent will help you determine a safe level of profit margin while buying and selling gold. If a profit margin is greater than 2% on any day, you can buy gold and sell it the next day or wait for 2-5 days to see a higher rise in price. Whereas if the profit margin is less than 2%, it is always recommended not to buy gold until you see an upward trend in gold prices or at least until it reaches 2%. You may have to wait for a few days but it ensures the safety of your investment. This is one of the best ways to use the data you accumulate when you track things like gold price in Rajasthan or whichever state on a daily basis. See more.
Stay away from fake news
You have to watch out for fake news and rumours created by traders who want to manipulate prices and make money off of it.
Buy Low and Sell High:
One of the best ways to earn a decent profit is by selling your gold when its price is high. You can easily make a profit by purchasing gold when its price is low and selling it when its price is high. If you would like to have a long investment in gold then you should try to buy gold when there is a dip in the market trend at that point in time. Even if you did not earn profits immediately, it will be considered a long term investment that could be profitable eventually.
Gold price changes every second, therefore you should make a quick decision when it comes to gold transactions.