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Contract size is 100 troy ounces. Gold currently trades at $1,687 per ounce. The value of a contract is therefore $ 168,700.
You cannot trade a continuous contract. Any continuous contract is an artificial construct, which cannot be traded. You can only trade single month contracts. The current front month is February 2013.
Thank you for the quick response. I had checked the website, however, I got confused because so far all I've been doing is using SIM on MetaTrader4 doing currency, and they also have 'GOLD' but it does not specify a month or anything. Is this just a construct for the demo platform or does it take into account the next month?
Also, one thing that caught my attention is that I set up a demo account with 10,000 and just 1:2 leverage, and still was able to trade 0.5 contracts.
No idea what you have setup on MetaTrader. MetaTrader is a broker software, where the backend is on the server of the broker and the front end is on your machine. There are quite a few FOREX brokers who use MetaTrader, and they can feed it with whatever they like....
If a contract does not specify a month, it is unlikely that it is an exchange traded futures contract. Some brokers offer CFDs (certificates of deposit), which are private contracts. If you trade CFD you are exposed to a significant counterparty risk, as the broker is your counterparty.
Exchange traded futures contracts require a margin, which is fixed by the exchange and/or the broker. The leverage is always much higher than 1:2. For gold futures the CME margin requirement - cash deposit required by the exchange for each contract traded - is $ 6.600 (inital margin) repsectively $ 6.000 (maintenance margin). If you divide the contract value of 168,700 by the initial margin, you end up with a leverage of 1:25. The broker may or may not pass on the full leverage to the final customer.
The XAUUSD symbol that most brokers offer in MT4 is a CFD that is made available to MT4 brokers via their liquidity pool providers, and is one of the rare CFD symbols in MT4-land that does not roll, or change symbol names as the actual underlying futures contracts roll. (Some MT4 shops offer a non-rolling SP500 symbol, but most seem to offer EPH3, having just rolled from EPZ2 - here's an example: CFD 2 | E-mini S&P 500 Futures )
IMO XAUUSD is loved by MT4 shops for many reasons, given the propensity for those customers to be on the losing end of trades. Throw in the minimum 40 cent spread, ranging as high as 60 or 80 cents, differing closing/opening hours, and it is basically criminal to trade XAUUSD, with any real size. Sure, it gives the ability to go in 1/100's, but given the right capitalization, it's a world of difference from the 1 cent spread that the real GC futures contract offers. Do also note that the XAUUSD prices, not only because of the bid/ask spread, will vary wildy, and, can leave a trader hanging: I'm being a bit lazy here and not looking it up exactly, but the last gold run (and failure) towards $1800, was a few dollars different in XAUUSD, which is significant IMO.
Thank you @Beljevina for the detailed explanation. Since I am just starting out and because of work and school I only have a few hours a day and can't be looking at the market all day, I would like to start out taking positions for a few days. Since my demo on MT4 only had Forex and this Gold Contract that's what I've been SIMing with, and for some reason the one that I seem to do best with is Gold so I figured I'd like to try it out once I went to real money with like 0.1 lots. Considering I would be looking to hold it for a few days, the spread wouldn't be so bad, the one thing of note is the price fluctuation that you are talking about, however I do not know the details.
Do you have any experience or thoughts about this product? Do you know anywhere where I could find information? I've been looking but haven't found much. Only tell me if you know it already, don't put too much effort into it.