Gold Investments: Profit-Taking & Bargain Hunting
You’ll often hear the terms “profit taking” and “bargain hunting” in terms of the gold investment market. What exactly do these terms mean in this regard, and is it important for you to learn to engage in one or both of those activities? This article breaks down the strategies that are used to execute a profit-taking or bargain hunting transaction.
Technical Trading of Gold
The two terms are most often used by technical traders. For example, if you’re buying gold because you believe that the government has destroyed the dollar’s value and that our nation’s current economic system is unsustainable then you aren’t likely a technical trader. Likewise, individuals who want to own gold as a way to balance out their portfolios aren’t technical traders.
A technical gold investment trader spends countless hours each day using advanced algorithms and multiple computer programs to look for anomalies in gold spot price movement. Technical traders try to identify patterns, and they spend most days glued to two, three or more computer screens just waiting for the exact moment to execute a transaction. They might buy and sell positions dozens of times per trading session. They usually deal with high-volume investments so even miscalculations that make a difference of only a few cents can make or break their accounts.
Gold Investment Profit-Taking
Profit-taking is the term used for the liquidation investments strictly for profit. You’re not selling your gold to pay bills or because you don’t think gold is a good investment anymore. You believe that it’s the most advantageous spot to sell your gold before the spot price falls.
Gold Investment Bargain Hunting
Technical gold investors use statistics like the “200-day trading average” to figure out if they think the live gold spot price is higher or lower than it should be. When the determination is made that gold prices are too low then technical traders start to stock up. Again, this hoarding of gold is only done until the yellow metal’s price crosses yet another one of technical traders’ hundreds of parameters.
If you’re used to holding your investments long-term and the thought of pulling your hair out every day doesn’t appeal to you then you might want to avoid technical trading. It’s still beneficial, however, to know what profit-taking and bargain hunting are so that you can always stay up to speed with what’s happening in the gold market.