XAUUSD Trading Basics Concepts
Learning to trade the xauusd market is much easier for beginners when beginners start by learning the xauusd basics. This way the other xauusd concepts become much easier to learn because the new xauusd trader will have already learnt about the basic ideas before proceeding to the other xauusd concepts.
The xauusd basics that traders should learn first before starting xauusd trading are:
What's XAUUSD?
XAUUSD Trading is the simultaneous buying and selling of one financial instrument for another. XAUUSD traders buy and sell for speculation purpose and for the purpose of trying to make a profit. Traders will buy a xauusd that they think will appreciate in value and sell the xauusd which they think will depreciate in value.
In XAUUSD traders buy xauusd trading instruments when they become undervalued and sell xauusd trading instruments when they become overvalued. This is the basic concept of trading xauusd, as a beginner if you want to become successful when xauusd trading you must learn to buy undervalued xauusd instruments & sell overvalued xauusd trading instruments. Many XAUUSD traders miss this concept and do the exact opposite buying overvalued xauusd trading instruments because that is when these xauusd trading instruments seem to be moving up and up and they sell undervalued xauusd trading instruments because these xauusd trading instruments seem as if they will continue to move lower.
Just like in stock market successful trader buy stocks when the stock price is low and sell stocks when the stock price is high. This is the same trading concept that traders should follow when trading xauusd.
What's a XAUUSD Trading Instrument?
Xauusd trading is the simultaneous exchange of one financial instrument for another, for this reason xauusd are traded in symbols known as xauusd.
What's a XAUUSD Trading Quote?
Because xauusd are traded in symbols, the gold trading price at which these xauusd trading instruments are exchanged is determined by the gold trading quote.
XAUUSD Trading quotes in XAUUSD Trading are quoted in the format of 4 decimal places.
What's a Pip?
Xauusd is quoted in the format of decimal places. Second last decimal place represents a Pip which is the smallest movement used to calculate profit and loss in xauusd market moves.
Pip means XAUUSD Price Interest Point: it is a one point move in the gold trading quote.
What's a Lot?
XAUUSD Trading is traded in units known as lots. There is also the Mini lot which is made up of fractions of the standard xauusd lots and the Micro xauusd lots which are fractions of the xauusd mini lots.
Therefore, in the above example where the xauusd instrument moved up by 50 pips if a trader was trading using one standard lot then their profit would be $10 multiplied by 50 pips which is $500 dollars.
What's XAUUSD Leverage?
Because not many traders can afford to trade standard xauusd lots which require a lot of money to trade, there is xauusd leverage in XAUUSD Trading which means that traders can borrow money and use the borrowed money to make trades with. For example xauusd leverage of 100:1 means that a trader with capital of $10,000 can borrow up to 100 times using the 100:1 xauusd leverage option and therefore after borrowing using this xauusd leverage the trader will have a total of $10,000 multiplied by 100, which means the trader will have a total of $1,000,000. This xauusd leverage is what makes XAUUSD Trading accessible to retail xauusd traders because retail traders can begin with little capital of their own and use xauusd leverage to borrow the rest of the money required for trading. The money that the trader deposits is referred to as a xauusd trader’s margin and a trader can continue borrowing money using this xauusd leverage option as long as they have the required margin in their account. This is why traders must have the required account balance in their trading account to open the trade transactions they want to.
What's Gold Trading Margin?
Margin is the specific amount of money that a trader is required to put aside in order to continue holding an open xauusd leveraged trade. Margin can also be explained as the deposit a trader is required to keep so as to maintain his open positions. This margin is a percentage of account equity that has to be set aside and allocated as a margin deposit for the open positions that are held by a xauusd trader.
