Sticking to the basics to maximize returns from gold stocks
To successfully trade gold stocks is about sticking to the basics. This means doing the necessary research on the gold stocks. The trader wants to be familiar with the countries in which these gold companies operate, their exploration programs, their production schedule and their finances. The gold companies with the best potential to generate stellar returns for their shareholders are those with a capable management team, high quality assets, strong balance sheets and a track record of completing their projects.
The better informed the investor is about the companies, the more likely they will pick the winning gold stocks. This includes using technical analysis of the gold companies’ stock charts to determine entry and exit points for stock trades. From a stock trader’s perspective, the best gold stocks to trade are those with recognizable price patterns. If both fundamental analysis and technical analysis gives the same conclusion on the gold stock, a clear buy or sell signal is given.
Using risk management is about keeping losses to a minimum and maximizing profits. Before making a gold stock trade, the investor knows what their downside risks and upside potential are. It’s only when the potential returns are significantly greater than potential losses that the gold equity trade will be done. Good money should only be deployed for good gold stock investments.