How to trade palladium: palladium trading tips for beginners in 2024

By:

Prash Raval

Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.

 & 

James Knight

James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.

Updated:  Mar 21, 2024

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This page explains how to trade palladium online in 2024. Learn about the different ways you can trade palladium, what moves its price, and why it might be a good addition to your portfolio. 

Can I trade palladium?

Yes, trading palladium is straightforward and available to anyone using an online trading platform. palladium is one of the most popular commodities for trading and can be accessed through various derivatives. 

You can trade palladium through many different avenues, including spot palladium, futures contracts, palladium options, palladium exchange traded funds, or CFDs. To decide on the best approach, you will need to consider your goals and time horizon before aligning your strategy with your specific objectives. 

Where can I trade palladium online?

Before you get started with palladium trading you’ll need to register with an online broker. Our experts have selected some of the top palladium trading platforms and you can click any of the links below to get started in just a few minutes.

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What is palladium trading?

Palladium trading is the process of using financial instruments to capitalise on price movements in its price, as opposed to buying physical bars and coins. Trading palladium is open to anyone with an online trading account. 

With palladium being a precious metal commodity, it is a popular choice among retail traders and thanks to the growing number of brokers offering the market, there’s a trading vehicle for everyone. Most palladium trading takes place via futures contracts, but for online retail traders, CFDs are most commonly used. 

Ways to trade palladium

There are several options available when it comes to trading palladium and the one you should pick depends on your budget, experience, and the timeframe for seeing returns. Here’s a look at the various ways you can trade palladium online.

• Trade palladium CFDs. Contracts for Difference (CFDs) are a popular way to speculate on palladium price movements without having to own the physical asset itself. This makes them ideal for commodity trading, where it’s not practical to own and store large quantities of palladium. With CFDs, you can profit from both rising and falling prices. CFDs also offer leverage, which can amplify your exposure to palladium markets. 
• Palladium spread betting. Spread betting is a trading method allowing you to speculate on the price movements of palladium without owning the physical commodity. With spread betting, traders can take positions on whether the price of palladium will rise or fall. You can use leverage when spread betting palladium. All profits are also tax-free. 
• Trade palladium futures. Futures contracts are the most common way to speculate on short term price changes. They are an agreement to make a trade at a future date for a pre-agreed price. palladium futures contracts require a detailed understanding of what impacts short term prices, and are most suited to someone with experience in the market.
• Trade palladium options. Options let you buy or sell palladium contracts at a predetermined price on or before a specific future date. palladium options trading requires some expertise but allows traders to capitalise on price changes and manage risk, which makes it popular with people familiar with the palladium market.

Should I trade spot palladium or palladium futures?

Trading the palladium spot market is usually easier. The palladium ‘spot’ price simply refers to its current market price. When you trade the spot market, you’re simply placing a trade on it to go up or down. 

Futures trading is more complex and requires advanced knowledge of the overall market and trading in general. When you use palladium futures contracts you lock in a deal to buy or sell palladium at a fixed price on a fixed date in the future. 

Trading palladium futures can be a lucrative endeavour, however, it’s not for everyone, especially those just starting out. The best way to begin trading palladium online is to use an online trading platform that offers palladium CFDs. 

How to trade palladium

Trading palladium is a simple process. Before you begin, you’ll need to register with a trusted online broker to access the palladium market. Follow the steps below to learn how to trade palladium.

What moves the palladium price?

Not all commodities move in the same way and palladium has several unique features that make it independent. 

The palladium market is largely driven by the performance of the global economy due to the heavy industrial demand for the material. Here are some of the major factors to consider.

• Industry. Palladium is an extremely important material for many industrial practices, meaning its price performance is more affected by the economy than other precious metals. 
• Autocatalysts. The vast majority of palladium demand is for autocatalysts. With around 85% of world palladium production going in this direction, the global automotive industry is key to the function of the palladium market. 
• Mining. Palladium is found in deposits alloyed with gold and platinum and nickel-copper deposits, typically in mafic igneous rocks. When mining operations struggle and palladium supply dwindles as a consequence, the price of the metal can surge. 
• The U.S. Dollar. Palladium is traded globally in United States Dollars. This means the value of the dollar can impact the value of palladium. Many traders often follow currency fluctuations when trading precious metals like palladium. 

What to consider when you trade palladium

When you begin trading palladium, it’s important to approach with a well thought out strategy. Considering a range of factors before trading can save you time and money in the long run. Use the helpful tips below to plan your palladium trading strategy. 

What are your trading goals?

Before you start, you should clearly define your trading objectives. Are you seeking quick gains, or will you be focused on a longer time frame using swing trading strategies? Knowing your goals before you start can help guide you in your strategy and also which palladium market to use. 

Does palladium suit your risk tolerance?

Make sure you’re comfortable with the potential for market fluctuations. If you’re a short term trader, then ensure you’ve checked the historical price chart for palladium to determine if it’s volatile enough for day trading. 

Will trading palladium add diversification to your portfolio?

Many traders focus on more than one market at a time and diversification is one of the core principles to follow. When you trade palladium, make sure it complements the other markets you trade. For example, if you already trade several similar commodities, you may be better off choosing another commodity market to spread your risk. 

Take the time to study the palladium market dynamics. 

Like many commodities, palladium has unique characteristics and supply and demand fundamentals. To trade palladium, studying the broader palladium market, especially historical price trends is essential. Before trading palladium, you will need to understand the factors that influence its value. 

Choose the right trading method.

We’ve already discussed the options available to you to trade palladium. Each has its own advantages, so you should select the one most suited to your trading goals. For example, trading palladium is best done via futures, options, CFDs, and spot. You could also trade palladium exchange traded funds (ETFs). 

Is palladium a good market to trade?

Palladium can be a good market to trade and it offers ample opportunities to astute traders. Among the precious metals, it is the most volatile. For investors, volatility is often viewed as a negative, but for traders, volatility brings opportunities. 

Daily fluctuations in the price of palladium can be significant, so it’s important to trade using prudent risk management and always use a stop loss. Palladium is also an excellent way to diversify your trading portfolio as its price often moves differently to traditional assets like stocks and bonds. 

What are the risks of trading palladium?

Trading palladium has the potential for significant rewards but also carries risks you need to be aware of. These risks are the same across the overall commodity market, but for palladium, several more specific ones apply. Below, we’ve explained the main risks of palladium trading.

• Volatility. The palladium market is known for its price volatility. Compared to other markets, the price of palladium can widely fluctuate daily. It can be costly if you’re unprepared for the volatile nature of the palladium market. 
• Macroeconomic factors. palladium prices are affected by several macroeconomic factors, such as industrial demand, inflation, interest rates, dollar strength, and geopolitics. Before trading palladium, you should have a good understanding of these. 
• Regulatory risks. Government policies can play a role in the way palladium prices move. Export restrictions or changes in tax regulations could introduce unforeseen risks. 
• Risk of leverage. When you trade palladium online, many online commodities brokers will offer leverage. Leverage can be an excellent way to magnify your gains, but it can also work against you. It’s important to use leverage carefully, especially when trading volatile markets like palladium. 

Palladium trading strategies

There are diverse opportunities when trading palladium, and you can use various strategies to make the best decisions. Understanding these strategies is essential to navigate the palladium market effectively. Below are several general trading strategies that can be applied to palladium trading. 

• Trend trading. Trend trading is a basic strategy and involves identifying and following the prevailing price direction of palladium. Technical indicators like moving averages can help in identifying trends. You can also look for higher highs or lower lows in Palladium’s price action. Traders look to profit by entering positions in the direction of the established trend, whether an uptrend (bullish) or downtrend (bearish). 
• Range trading. When the palladium market is not trending, it will consolidate or move within a defined range or channel. You can use a range trading strategy whereby you aim to buy at the lower end of the range and sell at the upper end. Understanding support and resistance levels within a range is essential to trade this strategy effectively. 
• Moving averages strategy. Moving averages are technical indicators that smooth out price data and help identify trends. One common strategy is to compare short-term moving averages (e.g. 10 day), with longer term moving averages (e.g. 50 days). You can then look for crossovers and divergences between these moving averages to find signals for buying to selling palladium. 
• Breakout trading. Breakout trading involves identifying key price levels, such as support and resistance, and entering positions when the price breaks through these levels. Traders expect the breakout to lead to a significant price movement in the direction of the breakout, allowing them to capture potential gains.
• Fundamental analysis. Fundamental analysis is a strategy used to evaluate the intrinsic value of palladium. This means rather than focusing on Palladium’s price chart, you can analyse data like supply and demand, geopolitical events, and other variables that impact its price. You can then use your findings and technical analysis to place a trade. 

The above strategies are just a few of the many that you can use to trade the palladium market. Remembering that each strategy has its own rules and risk management techniques is important. Professional palladium traders often combine multiple systems and adapt their approach to market conditions. 

Bottom line

One of the key benefits of trading the palladium market is the various ways you can get involved. There is a trading vehicle for everyone, from palladium stocks and ETFs for long term speculators to spot palladium, futures, and CFDs for short term traders. A trusted and regulated trading platform is a must if you want to navigate the palladium industry successfully. 

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