How to Buy Gold Stock
In today’s age investing money is probably the best way to insure good returns. After the economic recession, everyone is trying to invest even the little amount they save. Today people really want to learn how the market functions and so they're entering into it with full force. As a beginner in the world of investments, it’s advised that people should've a diversified portfolio. A diversified portfolio means the money invested isn't focused on a single investment but on various options. Now why should investors have a diversified portfolio? As investments come with their share of risks, if people invest their money in various fields there’s a lesser chance of suffering losses. Now out of so many fields of investments many investors have always been very keen to know about gold investment. There are several ways of investing in gold and purchasing gold stocks is one of them. So let’s see how to buy gold stocks.
Before we understand the purchasing of gold stock, it's better to know why should an investor buy gold stocks now when the prices are already touching the sky. Is it expected to rise further? Most people don’t know that every year more than 2000 metric tons of gold are produced from the earth. In spite of such a high quantity the demand for gold is always more than supply and the prices are ever-increasing. Which is why more and more people want to buy gold and which is why every investor should buy gold. There are also other ways through which people can buy gold. Physical gold, certificates, ETF’s, precious mutual funds, gold futures and paper gold.
Everyone that aspires to trade in the markets should select a consistent trading system. Below are the principles for examining a trading system. How many of these principles do you adopt with your current approach?
* To corroborate a trading system you need a minimum of 50 trades in the test. You should also have at least 75 ticks (overall market trades) in a bar to have a sound charting approach.
* Calculate your average profit per trade, the average loss, and the percentage of your all wins and losses.
* The biggest winning trade should not surpass 50% of the net profit. Otherwise the random lucky trade factor will throw off your system results.
* What is the Expectancy Ratio of your method? If it does not surpass 2 to 1 with a 50% but makes money, can you psychologically trade it and except all the losses necessary to stick with the system?
* As Van K. Tharp, Mark Douglas, Bill Williams, and Bent Steenbarger the Market Wizards all say, you trade your beliefs about the market. What does your trading system expose about your trading mentality? Does your system lead to doubt or confidence?
* Compare your trading system to other types of investments. Which system has the best Internal Rate of Return with the least risk? At minimum you need at least four times the return of a low risk investment (T-Bills) to make your system worth trading.
What is the best approach to build a solid trading system? Just like you build anything else. You first start with a goal, and apply the principles to reach the end result. Then you create a plan to achieve that goal, which includes all the risks, rewards, terms and conditions necessary to reach your goal.
The missing element is often the next step: execute the plan,...
How to Invest in Gold Stock
Today the best way of buying a gold stock is through the Internet. There are many investors who buy gold stocks online so as to diversify their investment portfolio and buying gold stocks is always considered to be a great investment. Gold has held it’s value over the years and according to leading financial consultants, it’s value is going to increase over the years. So let’s learn how to buy gold stock.
- If an investor wants to acquire gold stocks he/she should open up an online trading account which would be helpful in buying gold stocks from gold mining companies. The investor can also open an online trading account with a broker for additional help.
- The next step is to know which gold stock to buy and having the basic knowledge about gold mining companies and gold quality proves very helpful in this case.
- It’s advised that people investing in gold stocks should buy stocks of companies who have a proven history. View the performance of the previous 52 weeks and see how well the stocks have performed.
After understanding the basic rules of purchasing gold stocks, the investor should also know how much money to spend. Gold stocks can be sold at a later stage but investors do need money to buy them first. Investing in gold stocks is actually a good way of being in the gold business without owning physical gold. Plus the investor doesn’t need to pay the price of owning physical gold, the price of gold stocks usually depend on the prices of gold in the market. The investor shouldn't invest more than 5% to 10% of the entire portfolio as he/she's still taking baby steps. Before buying any gold stocks it’s always a good idea to consult an experienced financial consultant so that the investor doesn’t face heavy loses.