Getting Started with Spot Gold Operations: What is Shorting?

As more and more people choose safe-haven products for financial management, spot gold has become an important option for asset allocation. However, although spot gold has been very active recently, there are always some investors who are more or less uncomfortable in the trading process because they are not clear about their market trading methods. Today, the editor will share with you an introduction to spot gold operations: what is shorting.

1. What is the shorting principle of spot gold?

Everyone is familiar with how to go long in investment transactions. This is actually the most basic "buy low and sell high", but in order to get started with spot gold operations, we must also learn to short. When it comes to short-selling, it may not be understood by everyone. The so-called short-selling is simply a profit-making method of borrowing gold from a gold merchant and selling it at a high price while gold is at a high price, and then waiting for it to fall to a low price, then buying the same amount of gold and returning it to the gold merchant.

To give a simple and popular example, if you borrow a car from a friend, sell the car at a high of 200,000, and then buy it back to your friend when the price of the car drops to 150,000, then buy one of them. The 50,000 yuan difference generated by the sale is the profit from the short sale.

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2. How to reduce the risk of short selling?

Of course, the entry into the spot gold operation also needs to pay attention to risk control. Even if we go short in an excellent falling market, we should also focus on improving our risk control ability. For example, in order to reduce unnecessary slippage expenses and stop loss effects, investors can use a price-limited no-slippage platform such as Datian Global Precious Metals when buying and selling, which can reduce slippage costs on the one hand, and increase transaction costs on the other hand. Controllability ensures that the stop loss takes effect unconditionally; and usually investors should pay more attention to international current affairs news, do a good job of market fundamental analysis, accurately grasp the major market signals, and make more homeopathic investments to reduce the error rate and improve the profitability.

• Why choose a limit-price no-slippage platform?

Spot gold is a financial product in a two-way transaction mode. Therefore, to get started with spot gold operations, you should fully understand and scientifically operate the short-selling mechanism. To put it simply, shorting is an investment method of "sell high and buy low". If investors see that the price of silver will fall in the short term, they can earn profits by shorting. However, in the short-selling process, we should also use the price-limited no-slippage platform to take good risk control measures, which is more conducive to making steady money in the market!