As with stocks, cryptos, or currencies, there’s one thing that lures people to begin trading gold. It’s the promise of all the potential profit ready for the taking. What they always fail to mention is the common gold trading mistakes.
Terms like “gold standard” can give the implication that trading with gold is a surefire bet. Even though trading and holding gold is a fantastic way to make and store money, it’s not without its pitfalls.
Before you decide to dive into trading with gold, you should arm yourself with knowledge about the potential errors you could make. It’ll help make the entire process a lot less painful.
1. Do Not Let Your Heart Rule
We have to bill this mistake first, as it’s the one that can be the most devastating. Don’t let your heart rule your head. It’s easy to give in to emotion when a trade has turned sour or when things aren’t going your way.
Becoming emotional is the gateway to almost every other mistake on this list. So, if you feel yourself making a rash decision, step away for a moment.
2. Always Have a Solid Plan
A plan of attack isn’t an option but a necessity. Having a gold trading strategy is of paramount importance. Trading isn’t a fly by the seat of your pants game, and it’s not one where you can “wait and see what happens.”
That doesn’t mean you can’t adapt, as it’s natural for a plan to evolve and change based on whatever market-affecting factors are at play. It does mean that you need to keep a detailed log of everything you do and everything you plan to do.
3. Not Knowing When To Quit
If you haven’t made this mistake yet, you can almost be 100% sure it’s somewhere in your future. We’ve all done it. We’ve held on to that trade a little too long or been too stubborn to quit.
A situation like this stings worse when you’re looking down the barrel of a losing trade. Use it to learn, and remember that just because it didn’t go your way this time, it could have always been worse.
4. The Power of the Stop Loss
In the unlikely event that a trade plummets or begins to spiral out of control, a stop loss is there to ensure your safety. It’s good practice to implement a stop loss on the basis that it lets you determine how much you are willing to lose.
5. Listen to Your Gut
Much in the same way you shouldn’t listen to your heart, you should listen to your gut. Mainly this applies to being told by outside influences what is and isn’t a good idea concerning your trades.
Nothing feels worse than making a poor trade based on somebody else’s advice, and it can make you doubt yourself in the future. Always follow your instincts.
6. Being a Well Researched Investor
Nowhere is research more valuable than investing and trading in gold. If you do your due diligence, you’ll protect yourself from beginners traps. Overpaying for gold is a perfect example of that.
Keep tabs on things like the spot price of gold, and you’ll be well on your way to the gold trading profits you desire. Services like GoldSignals also offer a fantastic way to stay ahead of the curve.
Other Common Gold Trading Mistakes
We’ve covered the most common gold trading mistakes that a beginner gold trader might make, but in truth, there are plenty more. Some blunders might even catch a veteran trader, depending on the day.
Trading is an art, and one of the only things you can do to ensure you avoid mistakes is to continue to hone the skill. The other thing you can do, though, is read more of the finance section of our blog!
