How to trade palladium online

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Harry Atkins

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James Knight

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Updated: Sep 19, 2023

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This beginner-friendly guide dives into precious metal trading with a focus on palladium. Learn about how to trade it using CFDs, futures and options, or through ETFs, then find out about the most important factors that affect the price.

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How to trade palladium online – an easy six-step guide

Here are six steps to follow when preparing to trade palladium online:

1. Know your trading strategy. If you’ve never traded palladium before, keep your trading strategy simple. If you’re an experienced palladium trader, you can use more intricate trading strategies.
2. Decide your budget. Trading strategies should depend on how much money you want to venture. £500 and £50,000 budgets demand different approaches. Figure out your budget before you make your first palladium trade.
3. Choose your palladium type. Palladium bars come in one-ounce size, or larger denominations. Palladium coins come in many different designs. Palladium bars cost less per ounce, because you’re not paying a premium for the intricate designs seen on palladium coins.
4. Select your broker and sign up. A top palladium broker will have a sound reputation, an easy-to-use trading platform and affordable trading fees. Seek out an online CFD broker that matched this profile, then sign up.
5. Assess and manage your risk. A stop-loss order lets you limit the size of your loss, since it will trigger once your palladium trade falls to a certain price. Figure out the price you want to set your stop-loss order at, then be ready to enter that order as soon as you make your first palladium trade.
6. Place your first palladium trade. You’ve done your due diligence, figured out your palladium type, and your trading strategies. Now it’s time to make your first palladium trade.

Types of palladium to trade

Here are some of the methods you can use to trade palladium:

Contracts for difference

A contract for difference (CFD) allows you to speculate on the price of palladium without ever having to own any metal yourself. A CFD is just an agreement between a buyer and a seller where the buyer pays the seller the difference between the current value of palladium and palladium’s value when the contract expires. 

• Pros of CFD Trading: You can make a trade while betting on the value of palladium going up or going down. CFD brokers rarely charge transaction fees. CFD trading lets you trade with leverage, allowing you to make larger trades with a smaller amount of capital.
• Cons of CFD Trading: When you trade with leverage, you risk losing more than if you’d only traded with your own money. 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 get wiped out. Leave a CFD position open overnight and you’ll have to pay a fee. Large price spreads sometimes cost more than transaction fees.

Palladium certificates 

Palladium certificates are certificates of ownership for palladium bars and palladium coins. Allocated certificates mean you own specific lots of physical palladium. Unallocated certificates aren’t linked to any specific palladium bars or coins, but rather the dollar value of the palladium you own.

• Pros of palladium certificates: You don’t have to worry about storing and insuring your physical palladium bars. Transaction fees for palladium certificates are often lower than the fees associated with other palladium trading methods.
• Cons of palladium certificates: Owning the physical asset, even as a certificate, means you might have to pay a capital gains tax on any increases in value. The minimum purchase is also often quite high compared to buying palladium bars or coins directly, and if you buy a palladium certificate and the palladium certificate issuer goes bankrupt, there’s a good chance you won’t recover all of your investment.

Palladium futures 

A palladium futures contract is an obligation to buy or sell palladium at a set price and set time in the future. It allows you to speculate on price changes over the next few months and is often the best route if you have some reason to believe there’s going to be a big swing in value, based on things like supply or geopolitical factors.

• Pros of palladium futures: Futures contracts let you hedge against price fluctuation. The pricing model for futures contracts is relatively simple when compared to other palladium trading methods.
• Cons of palladium futures: Futures contracts have an expiration date, so the price for a palladium contract becomes less attractive as the closing date gets closer. Unexpected events can cause big price fluctuations that could result in you losing on your trade. 

Palladium options

Palladium options let you buy or sell palladium bullion at a set price on a future date. Note that palladium options aren’t the same as palladium futures, as with an option you have the choice not to buy or sell if you wish.

• Pros of palladium options: You can choose to trade with leverage, a technique that can give you bigger gains using smaller amounts of capital. You can bet on the price of palladium going down as well as up.
• Cons of palladium options: Trading with leverage increases your risk of suffering a big loss. Options drop in value as the option expiration date gets closer. Transaction fees tend to be relatively high when trading palladium options.

Palladium ETFs

An ETF (exchange-traded fund) is an investment that contains multiple assets and is traded on regular exchanges.

• Pros of palladium ETFs: You don’t have to store or insure physical palladium bullion, yet you can still make money when palladium prices go up. Low management fees keep costs down.
• Cons of palladium ETFs: If the price of palladium rises, you’re more likely to make more money owning physical palladium.

What affects the palladium price?

There are many factors that can affect the price of palladium:

• Supply and demand. The interplay between supply and demand is typically the biggest influencer of a commodity’s price movement. Labour stoppages and mining discoveries are just two of the factors that can affect the global supply of palladium. As for palladium demand, it often rises when investors feel the need to hedge against economic downturns. 
• Market sentiment. A bumpy market can wreak havoc on commodities prices. It’s best to jump into palladium when investor sentiment is positive, otherwise you risk getting dragged down.
• Market volatility. Volatility can knock investors out of a trade, even during a broader market uptrend. It’s best to avoid overreacting to sudden swings in palladium prices.
• Worldwide jewellery and industrial demand. Palladium can be fashioned into jewellery, and used for industrial purposes. Keep an eye on jewellery and industrial demand, which can affect the price of palladium.
• Value of the U.S. dollar. The price of palladium and the value of the U.S. dollar move in opposite directions. If the value of the dollar falls, palladium prices tend to go up. 

How to sell your palladium trade

Here are five steps to take when selling your palladium trade: 

1. Log onto your palladium broker’s website.
2. Open whatever existing palladium trade you have.
3. Check the price of the palladium investment you own.
4. Check the spread offered by the broker to make sure you can sell at (or near) a price you like. Spreads that are too wide can result in you leaving a lot of money behind.
5. Sell your position for either a profit, or for the sake of cutting your losses.

Palladium trading tips for beginners

Here are five tips for beginners to follow when trading palladium:

1. Establish your trading goals. Know your trading goals, so you won’t get swayed by emotions. For instance, you can buy palladium for a buy-and-hold strategy should lead you towards different trading decisions than a quick profit strategy.
2. Figure out your risk tolerance. You can be bold, or you can be conservative. Either way, you need to evaluate your risk tolerance, so you can decide whether you want to make riskier trading moves, or play it (relatively) safe. 
3. Know your budget. If you have a small budget for palladium trading, a trading strategy that lets you buy and hold palladium could make more sense than one that requires frequent trades and quickly burns through your capital. If you have a larger budget, you have more trading methods at your disposal.
4. Assess market conditions. Are palladium prices trending up or down? You should get to know the market before you make your first trade.
5. Pick the palladium trading method that works best for you. Make sure you fully understand the trading strategy you want to follow before you make your move.