Gold Futures, A Door Open For Bears
What kind of trading sentiment do you have on your own? Bullish or bearish? Yes, it is very important because there will be a difference (RoI) according to sentiment.
The same thing is going on with Gold futures. These days everyone with a bearish market sentiment is looking in a positive way towards this trading asset.
But why is it good for bearish traders only? And another important thing— how it can give benefits when it is going down. To clear all these doubts you have to read this post. Because here we will let you know what to do with an investment asset that is going down.
How assets with downside moves such as gold futures can be profitable for futures traders? We will explain various trading methods, technical analysis, fundamental analysis in this post.
If you want to spread the knowledge then must share this post with others, before you finish reading it at the end.
Why Gold Futures Open For Bears?
You may have noticed that gold futures are now open for bears this year. But why is this happening? The downside movement of the gold futures is the real reason.
That is the reason behind these statements of the world’s most popular traders. Don't worry if you are not a famous and expert trader in the futures exchange market.
Still, you can observe the market sentiment. The market sentiments are indicating that metals like gold are going to fall more.
This bearish sentiment is generating more opportunities for futures traders with such sentiments. They can have more opportunities to buy more futures contracts for gold.
Gold Futures Past Performance
During the first quarter Of 2020 before we make any prediction about gold futures. Let us know more about gold futures and their past performance. During this year, unpredictable fluctuations have been noticed in the various financial markets.
Whether it is crude oil or US stocks, traders always face a downside move beyond the analysis. Even trading signals were not able to predict anything about the various assets. All these things happened due to the COVID-19 pandemic. Coronavirus leads such problems to the various trading markets and trading platforms.
Whether it was a futures trading market, foreign exchange market, more.
Even the most centralized market known as stock exchange trading. And decentralized markets such as cryptocurrency exchange markets have seen the impact.
So in a similar way futures trading also got affected due to it. Below we have elaborated more on trading a futures contract on gold.
During the First Quarter Of 2020
With the start of this year, gold futures have seen stability in their exchange price. And it lasted for almost two months which was a good signal for many traders. After that, the whole future market was in a dip by the coronavirus.
In which commodities, commodity futures, derivative products, currencies, futures, and options with almost every asset on any trading platform saw a dip due to a sudden outbreak. But at that time gold was still there in the list of the top traded assets.
Gold Futures During Pandemic
At the end of the first quarter of this year, the pandemic was at its peak level. In the second quarter of this year, the whole world was facing issues due to pandemic.
At the same time, gold futures were going down. Gold was not falling down in the market, but there were many pullbacks in the market.
But, entering the third and then fourth quarter gold futures contract survived a little bit. And it came to a standing position in this market with high liquidity. Many options on futures had similar fluctuations in mercantile exchange.
And, also had an impact on margin requirements, open interest, more. Currency futures, index futures, futures options, and more were on the watch of traders.
Complete Year Overview For Gold Futures
During the first quarter, gold futures were stable, in the second quarter of the year they dropped. But what is the actual overview performance of this volatile asset?
If we see the performance, then the gold is not in that bad position for the long term. Yes, there are many pullbacks and as a speculator, you may see it as bearish. But still, many hedging and fund companies will declare it as a safe asset for any buy or sell price action
What is Bearish Asset?
Before knowing more about the performance of gold futures. Or any other interrelated futures in the market. You must have to know what a bearish asset is. Why an asset in the financial market known as bearish? When an asset is losing its value in the market, it falls in the bearish category.
Now you may ask who is a bear in the stock market or any other trading market? Then a bear is who looks for bearish assets and buys them especially when they are going down.
How Downside Moving Assets Can be profitable?
If a trader buys an asset which is going down, then how can it be profitable for him? The bearish traders always look for assets that are going downside in the short term. But in the long term, they will come back to a stable position.
Such assets like gold futures are used by traders to earn huge profits. Some traders apply this trading plan on ETFs. And some apply it to equities, securities, stock indexes, more. You can trade all the major trading markets and financial instruments in this way.
So How To Use This Downside Movement?
As a beginner, can you use the downside movement of any asset like gold futures? Yes, without any doubt, you can use this downside movement with trading strategies.
A trading strategy is very important if you want to increase profitability. You have to go check various technical analysis and fundamental analysis of an asset.
After that, you have to check out various trading signals and trading indicators. This is to find out what is the market trend according to signals. Now you can use the downside movement with the same strategy used for short-term trading.
You have to buy that asset during pullbacks, now hold it for long, or sell it to earn on margin or with initial margin. It is not that hard to do if the market data is read in the correct way. You can trade gold futures with these tricks too.
Conclusion - Gold futures
You can see that gold futures are going down and the traders with the bearish market sentiment have a positive trading mindset for it.
The whole world is saying that it is an economic recession for the world. But the doors are always open for bears during this recession. That is why these traders are also known as the trend changers rather than trend followers.
They are many times opposite the trends because they find tips at such places, where others miss. So that is the only difference between bearish and bullish sentiment.
It is changing the trading perspective for gold futures traders. Your perspective toward trading will decide the results for you. If you are trading with the right perspective then you can earn more on futures trading.
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