Your Comprehensive Guide to Trading Platinum

Since its discovery in 1557, platinum is one of the rare and precious metals on the market and is grouped with gold and silver. Indeed, it even fetches a higher price than gold, especially during routine periods of the market and political stability because of its rarity. Globally, the amount of platinum extracted is less than 1/10th of the total gold extracted annually. 

Its rarity and high demand across the globe have made it a great commodity for trading, but how do you go about it? Here is a comprehensive guide highlighting the types of platinum to trade and the main steps to follow when trading platinum.

What Options Do You Have for Forex Trading?

If you have decided to start trading platinum, here are the main methods to consider: 

• Contracts for Difference 

A contract for difference (CFD) is a type of trading contract that is executed by a seller and a buyer. In the contract, the seller is paid by the buyer the difference between the present value of platinum and the value at a contract time.

The main advantage of CFD trading is that you can bet on the price to move up or down. Furthermore, they allow you to trade with leverage, which implies that you can make larger trades when using small amounts of capital. 

Although leverage in CFD trading is an advantage, as we have already mentioned, it is also a disadvantage because it makes it possible to incur bigger losses. Large price spreads can sometimes cost more than the transaction fee. 

1. Platinum Certificates 

These are certificates of physical ownership, such as platinum coins and platinum bars. When the certificates are allocated, it implies that you actually own a specific quantity of physical platinum. However, unallocated platinum implies that you do not actually own the platinum, but their value.

The advantage of trading platinum certificates is that you can avoid the challenges of storing and insuring platinum bars. The transaction fee for platinum certificates is also lower compared to those of other platinum trading methods.  

However, it is important to note that it comes with one disadvantage. In countries such as the United States, platinum certificates are considered collectibles, which implies that you will be required to pay capital gains tax after making profit. 

1. Platinum Futures 

You can also trade platinum using a futures contract, which is an agreement for a trader to sell or buy at a specific price at a set time in the future. To trade futures, you utilize leverage to but the contracts, which are tied to the current value of platinum on the market. When the price moves downwards, the traders increase their margins to keep their positions. 

1. Trade Platinum Shares 

If you want to use a direct method of trading plating, consider trading the shares of companies dealing with the precious metal. Some of the top companies that deal with platinum include Anglo American Platinum, Lonmin, Norilsk Nickel, and Impala Platinum. 

How to Trade Platinum Online 

If you are new to platinum trading, here are the six steps that you should follow. 

• Develop Your Trading Strategy 

As a beginner, you should start by identifying the preferred trading strategy. Consider using simpler trading strategies and only shift to more creative methods after gaining skills. 

1. Decide Your Preferred Budget 

This is a very important step because most of the strategies depend on the funds you want to use. For example, if you want to use £5000, it is a great idea not to select methods suited for £5,000,000. So, set aside your budget before making the first made. 

• Determine the Preferred Platinum Type 

Before you actually place your first trade, it is paramount to determine what you will be trading; “Will you trade platinum bars or futures.” 

1. Select Preferred Broker and Sign Up 

The broker you select will also be crucial in determining how successful you can trade platinum. To identify a good platinum broker, only go for the one with a good reputation, affordable fees, and an easy-to-use trading platform. 

1. Assess and Manage Your Risk 

One of the best methods of managing your risk is using a stop-loss order, which allows you to limit your losses if the market moves against your prediction. 

1. Place Your Trade 

After doing your due diligence, place your first trade.

Special Tips for Trading Platinum for Beginners 

If you are new to platinum trading, the following tips can help you to trade more successfully.

• Draw Your Trading Goals 

Understanding your trading goals can help you avoid getting swayed by emotions. Your goals can also help you to draw the preferred trading strategy, such as a method to turn a quick profit or a buy-and-hold strategy.

• Determine the Risk Tolerance Levels 

No matter the trading strategy of choice, it is paramount to evaluate your risk tolerance carefully. This can help you to determine if you will go for the safer routes or try riskier moves.

• Draw Your Budget 

If you are working with a small budget, a strategy that allows you to buy and hold might make more sense than another that requires frequent trades, which means a lot of transaction fees. If you have a bigger budget, it will be easier to try more platinum trading methods.

• Always Analyze the Market Conditions

If you want to be successful in platinum trading, it is paramount to always analyze the market comprehensively before entering a trade. For example, are the prices of platinum trending high or low?

• Pick the Strategy that Works Best for You  

We must indicate that when trading platinum, just like forex trading, there is no one-fits-all strategy. A strategy that works well for another person might fail to work in your situation. This is why you should look for a strategy that you know well and stick to it. Remember to review your success and progress using the selected strategy regularly.  

If you want to trade platinum, it is paramount to understand your options and develop a good strategy. Make sure also to draw a good strategy, follow the latest trends in the world of platinum trading, and focus on honing your skills to become a better trader.