What is the GLD ETF?
The SPDR Gold Shares ETF (GLD) is an Exchange-traded fund. The GLD ETF seeks mirror the performance of the gold market. The GLD ETF offers investors a way of participating in the gold bullion market without taking physical delivery of gold. The Gold ETF makes it easier of the small trader or investor to buy gold.
Can a trader trade GLD Options?
When trading options some things are just not worth it. Options have high volatility. A trader might be up 20% one second and down 50% the next when trading options. This can be fool’s gold. The main problem with some options is the difference in the bid/ask spread. If a stock or ETF does not have much volume usually the options bid/ask is so wide that just a purchase of that option would put the trader at more that 10% loss. When the trader goes to sell they would lose another 10% on that trade. A trader would have to make 21% to just break even. The GLD ETF has enough volume that the difference in the bid/ask make it ok to use to trade options.
GOLD ETF VS GOLD FUTURES
What are the benefits of using the ETF GLD?
There are many great benefits to trading the GLD ETF. One is that it is a way for the small trader to trade in the gold futures market. With a futures contract a trader needs much more capital to trade (if they are considering risk). When trading the GLD ETF a trader can trade any amount. The trader does not have to consider contract expiration.
What are The Disadvantages of using the ETF GLD?
One of the main disadvantages of using the Gold ETF is a gap in over night positions. The futures market is open all day with a small break. That means that the gold market trades night and day. With this type of trading you may get some gaps on overnight positions. If you had a gold position that hit a stop during the night the trader could close the position. With the GLD ETF the trader would have to wait until the stock market opens to close that position.
Trend Following GLD
The GLD ETF is a good ETF to follow with your short-term trend following strategy. Historically gold future market has been a choice market for trend following futures traders.
GLD Chart Uptrend
GLD Chart Downtrend
Gold Shares (GLD) are listed on the New York Stock Exchange and trade the same way ordinary stocks do. It is possible to buy or sell Gold Shares continuously throughout the trading day on the exchange at prices established by the market. Additionally, it is possible to place market, limit and stop-loss orders of Gold Shares.