Gold Trader: A swing trader or a day trader?

Gold as an asset has been traded since the beginning of time, its less of a monetary exchange asset in present day but it’s still considered of great value. The commodity has been exchanged by gold traders for speculation, hedging and government treasury exchanges.

There are many ways one can trade gold, as a value denominated in a currency (CFD)- US$/OZ, in the futures market, in an ETF or even in stocks, which would be under the mining stocks, such as Barrick Gold.

In the following blog, we will be differentiating between the swing trader and the day trader in the gold market.

Gold Trader: Viable ways to trade gold

There are several ways to trade gold as listed above, but we are going to divide gold trading into two different trading styles: Swing trading and Day trading. At the end of this blog we will give you the TRADEPRO opinion on which gold trading way holds a higher probability of success .

Out of all of the ways to trades futures mentioned above we will focus on gold futures and ETF/stock gold trading. We will outline pros and cons to each method below. For more information on day trading or swing trading click.

Gold Trader: The Swing approach

The more common method to trade gold would be swing trading gold, meaning taking longer positions in the commodity. There are two primary ways one can swing trade gold and a tertiary way that may be less common and more risky.

The first two ways include options and CFD’s. One can swing trade gold ETF’s or mining companies which are closely correlated to gold. This is not an exact replica of the commodity and its price movement, however, it is a good reflection. ETF’s such as GLD and GDX are popular in gold options trades. Trading gold with options is a viable option as you get time to capture a move depending on the options expiry used, along with capped risk to your premium. You can also use options combinations such as debit spreads to mitigate risk.


The second more common way one can swing trade gold is using CFD’s such as GOLD. The gold CFD also holds risk depending on the leverage used. One should be cautious when using this method.


The third way to swing trade gold comes with more risk but it is a direct reflection of gold’s price movement. Gold futures. Futures hold a lot of leverage and favorable margin, meaning that with a smaller account one may have access to a gold contract. Trading gold futures holds the closest correlation to the commodity market but each dollar swing in your favor or against account for a $100 change to your position. Meaning if gold swings $4.00 in your favor you are up $400 on the one contract. If it goes $4.00 in the opposite direction then you are down $400 on your position. This is then magnified by the number of contract you use to trade the position. When swing trading one usually uses wider stops as well.

Gold Trader: The Day trading approach

Day trading gold is a little less common than it is to swing trade the commodity. However the method used is often; futures.

The futures market holds a lot of liquidity as is open throughout the day and night, for the most part. This gives traders access to the direct market and to price fluctuation. Throughout the night in the Eastern time zone there is a lot of price movement as the most action happens during the London trading session. Specifically the London morning session.

Gold Futures as seen on Sierra Chart

One tick of movement in the futures gold market is a change in your position by $10 against or for. This is for a 1 lot trade. As mentioned before this is a less popular version of trading gold and holds a larger amount of risk. This is generally popular with swing traders.

Final thoughts

Swing trading gold is the more popular option out of the two as there are several different ways to do so that are less risky than day trading the commodity. That is unless you live in a London time-zone. There are many advantages to swing trading the commodity, one being you are able to risk less capital to get exposure to the market and its price movement.

If you want to join us in our live trading room and trade alongside a community of professionals, check out our ELITE package below.

Want to trade more passively? Check out our newsletter, trade ideas and live analysis in the Swing Trader package below.

The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.