Trading Gold Long Term

jaydee · Oct 6, 2005

I've been trading daytrading Forex quite successfully for a while now, but I want to make a move into gold futures while this bull trend is still taking shape. I've searched this forum and found a lot of conflicting views on how to trade gold, so I thought I'd put my questions here in hopes of having everyine weigh in and so we can get the answers all in one place:

Keep in mind, I want to buy gold contracts for the long term (at least a few months) and I'll be buying more as I make profits on existing contracts and as I add money to my account. I will NOT be daytrading. Immediate fills would be nice, but as long as I can get in at a resonable price within a reasonable period of time I'll be happy. More importantly, as time goes by I will be buying (and eventually selling) increasing numbers of contracts and I want to be sure that these large orders will have a chance of getting filled.

My questions:

1. Comex or CBOT? I much prefer CBOT because it's electronic and offers minis, but the volume looks atrocious!

2. Should I buy contracts that are far out or should I trade the one with the highes volume and OE?

Actually that's all I can think of for now. I would greatly appreciate any help.

Thanks a lot!

SethArb · Oct 6, 2005

dear midas ! ( jaydee )

the pro's trade the lead contract
and rollover when its time

thus comex ( pit ) is easier to do switches in

( i.e. FEB - DEC )

as far as I know ... elec. mini and full size elec.
gold ( CBOT ) do not offer this now ?

in the meantime ... I assume you will be trading
small at first ... on CBOT

you can split the spread and even place
limit orders anywhere you wish to
and not worry about slippage as much
just be careful using stops ... esp overnight
once in a while ... fat finger or something
triggers slippage of a few $$$ in CBOT compared
to COMEX ( traded overnight on Access / Nymex )

jaydee · Oct 7, 2005

Quote from SethArb:

dear midas ! ( jaydee )

the pro's trade the lead contract
and rollover when its time

OK that's what I thought but I wasn't sure if the costs of rolling over would be prohibitive.

thus comex ( pit ) is easier to do switches in

( i.e. FEB - DEC )

as far as I know ... elec. mini and full size elec.
gold ( CBOT ) do not offer this now ?

Hmmmm....Are you saying you don't think that electronic contracts can be rolled over? I'll look into this.

in the meantime ... I assume you will be trading
small at first ... on CBOT

Yeah, the idea is to start with as little capital as possible. Since I'll be trading longer term I want to be able to withstand some volatility about ($30 against me) so I'm adding my own "margin" on top of the necessary one. However, with Comex's higher margin requirements and the fact that $0.10=$10.00 on a full contract, I would need about $4000 just to get started. Instead, I think I'll start with 2 min CBOTs trade up to a full CBOT as soon as possible (lower margin requirement), and then finally start trading the full sized Comex. The low volume on the CBOT only concerns me for when I start trading larger numbers of contracts.

you can split the spread and even place
limit orders anywhere you wish to
and not worry about slippage as much
just be careful using stops ... esp overnight
once in a while ... fat finger or something
triggers slippage of a few $$$ in CBOT compared
to COMEX ( traded overnight on Access / Nymex )

What does split the spread mean?

Thanks a lot for your help. I'm can't wait to get started with this stuff but I want to make sure I know what I'm doing first. It's a little frustrating when gold jumps $9.00 in two days, though!