Wednesday, May 1, 2013

Metals Trade Sample

About the metals markets these days, Investment experts have long-recommend portfolio diversification that 10% to 20% (or more) of an investor's assets be devoted to tangible assets such as gold, silver and platinum bullion and bullion coins.

In today's uncertain political and economic environment, there are many reasons to consider investing in precious metals now. Here are some reasons: 

  • Precious metals have been a solid hedge against a declining U.S. dollar
  • Precious metals have been a proven safe-haven in times of war, political strife and uncertainty 
  • Precious metals can offer outstanding price appreciation and profit potential

The Mostly Traded with Highest Liquidity
XAU/USD  (Spot Gold  vs. US Dollar)
XAG/USD   (Spot Silver vs. US Dollar)

Primary (base) vs. Secondary Instruments
Similar to FOREX, the base instrument is the reference that defines the contract size.  The profit and loss calculation however is always on the secondary instrument, which in the following cases is the US Dollar:

Instrument Pair    Contract Size    Value of 1 pip
XAU/USD      100 oz.      US$ 10.00
XAG/USD      5,000 oz.      US$ 50.00

Margin Requirements 
In order to buy or sell 1 contract (lot) of Spot Gold or Silver with ICM Brokers, the investor must have a minimum of $1,000 in the account.  Though an initial margin of $1,000 is required, ICM Brokers has no maintenance margin on standard accounts.  In order to guarantee that clients’ accounts do not extend into negative equity, the trading platform automatically closes all positions at the 5% Equity/Margin ratio.

Profit and Loss Calculation Examples
• Buy 5 GOLD at 821.20  |  Sell 5 GOLD at 828.30
   821.20 (open price)   x 5 (lots traded) x 100 oz. (contract size) = 410.600
   828.30 (close price)   x 5 (lots traded) x 100 oz. (contract size) = 414,150
                                                                                                           $ 3,550 (Profit)
• Sell 3 SILVER at 11.05   |   Buy 3 SILVER at 10.85
   11.05 (open price) x 3 (lots traded) x 5,000 oz. (contract size) = 165,750
   10.85 (close price) x 3 (lots traded) x 5,000 oz. (contract size) = 162,750
                                                                                                           $ 3,000 (Profit)

To know more about our ICMBrokers Metals Instruments please click the link: ICMBrokers Spot Precious Metals

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