Eager to trade platinum online? Our easy to digest guide to platinum trading will show you how to make a smart investment in this precious metal. If you’re ready to start trading platinum, have a look at the choices below. Not quite ready yet? Keep reading.
Compare the best platforms for trading platinum
The table below presents some of the best online platinum brokers, along with all the information you need to pick a trading platform that matches your needs.
Trade platinum bars, right now
Physical platinum comes in platinum bars and platinum coins. If you’re looking for a way to trade platinum bars and platinum coins online, we’ve got you covered. Check out our list of platinum trading websites below.
How to trade platinum online – an easy six-step guide
So you want to trade platinum online. Here are six steps to take as you get ready to start:
- Know your trading strategy. If you’re a beginner, try simpler platinum trading strategies. If you’re an expert platinum trader, you can get more creative.
- Decide your budget. If your budget is £500, you’re wise not to adopt trading approaches that are better suited to a £50,000 bankroll. Set your trading budget before you make your first trade.
- Choose your platinum type. You can buy platinum bars in one-ounce denominations or larger denominations. Meanwhile, platinum coins come in many different designs, from numerous different mints. Platinum bars cost less per ounce, because you’re not paying a premium for the designs that appear on platinum coins.
- Select your broker and sign up. Some of the criteria you should look for in a platinum broker are a strong reputation, an easy-to-use trading platform, and affordable trading fees. Look for the platinum broker with those traits, then sign up.
- Assess and manage your risk. One of the best ways to manage risk is with a stop-loss order. A stop-loss order lets you limit the size of your loss, since it will trigger once your platinum trade falls to a certain price, limiting the size of your loss. Have your stop-loss order ready to go right after you make your first trade.
- Place your first trade. You’ve done your due diligence. Now it’s time to trade platinum and make your first step.
Types of platinum to trade
Here are some of the methods you can use to trade platinum:
Contracts for difference
A contract for difference (CFD) is a trading contract to be executed by a buyer and a seller. The buyer pays the seller the difference between the current value of platinum and platinum’s value at contract time.
- Pros of CFD Trading: You can bet on the value of platinum either going up or going down. CFD brokers usually don’t charge transaction fees. CFD trading lets you trade with leverage, which enables you to make larger trades while using a smaller amount of capital.
- Cons of CFD Trading: In leveraged trades, enables bigger losses as well as bigger profits. Leave a CFD position open overnight and you’ll have to pay a fee. Large price spreads sometimes end up costing more than transaction fees. If the price of the asset drops below a certain point and you don’t have enough money in your account to support the position, you could lose your entire trade.
Platinum certificates are certificates of ownership for physical platinum, such as platinum bars and platinum coins. Allocated certificates mean you own specific lots of physical platinum, whereas unallocated certificates aren’t linked to any specific platinum bars or coins, but instead the dollar value of the platinum you own.
- Pros of platinum certificates: You avoid the hassle, cost, and worry of storing and insuring your physical platinum bars. Transaction fees for platinum certificates are often lower than the fees you need to pay for other platinum trading methods.
- Cons of platinum certificates: In the United States, platinum certificates are regarded as collectables by the IRS, which means you have to pay a 28% capital gains tax on your gain if you sell for a profit. Certificates often require you to buy larger minimum amounts than physical platinum, making certificate purchases harder to afford. If you buy a platinum certificate and the platinum certificate issuer goes bankrupt, you might not recover all of your investment.
You can trade platinum with a futures contract. It is an agreement for a trader to buy or sell platinum at a certain price, at a set time in the future.
- Pros of platinum futures: Futures contracts allow you hedge against price fluctuation. Futures contracts have a simpler pricing model than many other platinum trading methods.
- Cons of platinum futures: Futures contracts have an expiration date, which means the price for a platinum contract becomes less attractive as the closing date gets closer. Unexpected events can cause big price fluctuations that could result in you losing money.
Platinum options let you buy or sell platinum bullion on a future date at a set price. The difference between platinum options and platinum futures is that with there’s no contract involved when trading platinum options, so you can choose not to go through with the trade.
- Pros of platinum options: You can trade with leverage, which returns bigger gains using smaller amounts of capital. You can bet on the price of platinum to go up, or down.
- Cons of platinum options: Trading with leverage raises the size of your loss if you make the wrong call. Transaction fees tend to be higher when trading platinum options than when trading other forms of platinum. Options drop in value as the option expiration date gets closer.
An ETF (short for Exchange Traded Fund) is an investment that contains multiple assets. It’s traded on regular exchanges, similar to the way individual stocks are traded.
- Pros of platinum ETFs: You don’t have to endure the hassle of storing and insuring physical platinum bullion. Low management fees keep costs down.
- Cons of platinum ETFs: If the price of platinum takes off, you’ll probably make more money owning platinum bars or platinum coins than merely holding a platinum ETF.
Research what affects the platinum price
There are many factors that can affect the price of platinum and your trading strategy. Here are some of them:
- Market sentiment. A bear market can cause steep drops in commodities prices. On the flip side, a bull market can deliver big gains. It’s best to jump into platinum when a bull market is in play.
- Supply and demand. The relationship between supply and demand is the biggest influencer on the price of an asset – in this case, platinum. Precious metal mining can ebb and flow based on factors like mining discoveries and labour stoppages. Meanwhile platinum demand often rises when investors feel the need to hedge against economic downturns.
- Platinum market volatility. Volatility can cause nervous investors to close their trade, even during a broader market uptrend. Try not to overreact to sudden swings in platinum prices.
- Worldwide jewellery and industrial demand. Platinum jewellery and platinum for industrial purposes are two uses that go beyond mere bars and coins. Follow the trends of jewellery and industrial-based demand, as that can and does affect the price of platinum.
- Value of the U.S. dollar. The price of platinum and the value of the U.S. dollar are inversely related: If the value of the dollar falls, platinum prices go up.
How to sell your platinum trade
Here are five steps to take when selling your platinum:
- Log onto your platinum broker’s website.
- Open your existing platinum trade.
- Check the price of the platinum investment you own.
- Check the price spread offered by the broker to make sure you can close your position at a price you like. Spreads that are too wide can result in you missing out on some of your money.
- Sell your position for a profit, or to cut your losses.
Platinum trading tips for beginners
Let’s review the steps you should go through if you’re a beginner interested in trading platinum:
- Establish your trading goals. Knowing your trading goals helps you avoid getting swayed by emotions. It’s also necessary for establishing a trading strategy. For instance, a buy-and-hold strategy will lead to different trading decisions than a strategy designed to turn a quick profit.
- Figure out your risk tolerance. Whether you choose to be bold or cautious, you need to evaluate your risk tolerance, so you can decide whether you want to make riskier trading moves, or try safer routes.
- Know your budget. If you have a small budget, a trading strategy that lets you buy and hold platinum could make more sense than one that requires frequent trades and thus lots of transaction fees. If you have a larger budget you have more platinum trading methods at your disposal.
- Assess market conditions. Are platinum prices trending higher or lower? Get to know how the market’s acting before you make your first trade.
- Pick the platinum trading method that works best for you. Make sure you fully understand the trading strategy you want to follow before you make your move. Once you do that, you’ll be ready to trade platinum.
Try some of our investment courses for beginners
Still not ready to trade? Check out the easy-to-follow educational guides on this site and further your platinum trading knowledge.