Trading Platinum: How To Trade with CFDs

Trading Platinum

Table of Contents

Platinum is considered one of the rarest and most expensive precious metals in the world. Do you know why? 

The key reason behind its rarity is that only 130 tonnes of Platinum are extracted from mines every year in comparison to 1,700 tonnes of gold.

But that’s not the only reason why traders prefer trading platinum; there are several more. On the other hand, the trading of Platinum is not new; it has been carried out for several years.

So, if you’re too wondering to trade Platinum, read this article till the end to understand the topic more efficiently.

The Platinum Market: 

As the most precious metal, Platinum is highly appreciable in the jewelry sector, with over 50% of total consumption goes to this industry.

On the other hand, South Africa accounts for 80% of mining of this precious metal, while the rest is mined in North America and Russia.

Moreover, this precious metal is traded all over the world, from the New York Mercantile Exchange (NYMEX) to the Chicago Board of Trade (eCBOT) and all the way to the Tokyo Commodity Exchange (TOCOM) in Asia from 22:00 to 20:59 GMT.

On the other hand, many market analysts forecasted that this grey-white metal’s prices would exhibit abnormally significant movement in the near future as platinum jewelry catches favor in the West.

Importance Of Trading Platinum For Traders: 

After gold, Platinum is considered the high potential investment vehicle in the precious metals category.

However, it is still trying to make its impact in the financial world, despite its limited availability and scarcity due to high power costs and a complicated extraction method.

But many experts believe trading platinum is a means to express a bullish effect on global growth. Moreover, others consider it a safe haven and a hedge against the dollar weakening.

Just like gold, Platinum can be traded in a number of ways through Platinum Futures, ETFs, Options, Shares, and CFDs.

Above all, CFD is the best way for trading Platinum. However, CFDs are complex instruments and carry a high risk of losing money rapidly due to high leverage.

Most of retail investor accounts lose money when trading CFDs. So before starting trading, first, ask yourself whether you can afford to take the risk of losing your capital.

How To Trade Platinum?

As we mentioned above, CFDs are the best way to trade Platinum. In CFD, a trader never buys or sells an asset, instead makes profits by speculating on the market price fluctuations.

If you’re too looking to start trading Platinum, here’s a step-by-step process to get started.

Find A Good Brokerage Platform: 

Finding a good and trustworthy brokerage platform is a crucial step in your trading journey. Today, there are many CFD brokers available on the internet, but choosing a reliable one is quite challenging.

Before deciding on one, check out for their market reputation, fee structure, and clients’ reviews. If you’re still confused, then go with our top recommendation: ABInvesting.

Open A Trading Account:

Once you’re done choosing a good brokerage platform, it’s time to open a trading account with them. You can’t place a trade without a brokerage account.

As mentioned above, CFDs are complex instruments and carry a high risk of losing money rapidly due to high leverage; you can first practice trading platinum on a free demo account.

Choose A Good Trading Strategy:

After completing the account opening process, you’re all good to go now. Before placing an order, choosing a good trading strategy is necessary to increase your profit chances.

You can choose between some of the popular strategies such as Day Trading, Scalping, Swing Trading, etc.

Open A Trade Position:

As you have decided on a good trading strategy, it’s time for the real thing now. By implementing all your skills and strategy, open a trading position.

After opening the position, the only thing you have to do is monitor it regularly and close it when your financial objectives are met.

Pros and Cons of Trading Platinum:

Pros:

  • Offers Portfolio Diversification
  • Hedging against Inflation
  • Reduced Volatility
  • High Trader’s Demand
  • Flexibility and Cost-Effective
  • High Liquidity

Cons: 

  • Not as Popular as Gold
  • Low Market Demand

Why To Choose Trading Platinum? 

Platinum trading is getting more popular day by day for many good reasons. There are several reasons which make it an appropriate trading instrument for a trader.

Here are some of the reasons why you should consider choosing platinum trading:

Flexibility: 

Platinum’s value often changes within minutes or even seconds. So when you trade Platinum, you have the option to close your position anytime.

This type of trading offers you the flexibility to open or close your positions anytime and earn profits from even small price fluctuations.

Safe Haven:

Platinum is considered a safe haven as it can retain its value back in case of any market up-down or worldwide economic uncertainty.

High Liquidity:

All precious metals come with high liquidity, which means you can trade Platinum anytime. This is the main reason which makes platinum trading a lucrative trading option.

Offers Hedging against Inflation: 

The intrinsic value of precious metals such as Platinum is not dependent on foreign currencies. Therefore, it has the ability to retain its value during the inflation period when the value of currencies starts falling.

Portfolio Diversification: 

Adding Platinum to your investment portfolio can lower the chances of high volatility. As there is no direct connection between precious metals and other asset classes, the chances of volatility in platinum trading are very low.

High Leverage:

By trading Platinum, you can use high leverage to open a big position. Most online brokers offer good leverage ratios on platinum trading.

Conclusion:

As Platinum offers great trading opportunities, but it may not suit all sorts of traders. However, the number of benefits of trading platinum may overshadow this fact.

In addition, there are several ways to trade Platinum; and the most profitable of all these is CFD. Above, we provided all the information you’ll need before starting to trade Platinum.

So, we wish you good luck with your trading journey!

Risk Warning: CFDs are complex instruments and carry a high risk of losing money rapidly due to high leverage.

Most of retail investor accounts lose money when trading CFDs. So before starting trading, first, ask yourself whether you can afford to take the risk of losing your capital.

FAQs: 

Is Platinum Good For Trading?

Yes, Platinum poses as a great trading opportunity for both beginner and advanced traders. The reasons behind its wide popularity are portfolio diversification, high leverage, and high liquidity.

How Do You Trade Platinum On the Stock Market? 

The best way to trade Platinum is via Contracts For Differences (CFDs) derivative instruments. It lets you speculate on the price movements of Platinum without actually buying it.

Is Platinum A Good Inflation Hedge? 

Platinum and gold have the most reliable and significant inflation-hedging capacity among all the precious metals available for trading during the economical and financial up-down.

Is It Worth To Invest In Platinum? 

Many people invest in this rare metal by buying jewelry. However, these ornaments hold low market resale value as the price of platinum may depreciate due to wear and tear.

Instead, you should invest in Platinum through ETFs, Stocks, and CFDs to increase your investment worth.

Is It Better To Buy Gold or Platinum? 

As some investors look for more stable and long-term investing, in this case, gold can be a better option. However, that doesn’t affect the value of Platinum. Both metals offer good trading and investing opportunities.

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