Silver Trading – 3 Factors To Know Just Before Playing
Silver trading will glitter in your basket of financial investment with its spectacular potential profits. In contrast to gold, the silver price is determined by store of value and requirement of silver in the industry. Gold doesn’t have industrial use. So silver more fluctuating than gold and gives more chances of trading for well informed traders.
Where can you trade silver?
Silver trading can be used as a weapon against inflation. More people who trade the commodities are interested in receiving cash profits of the difference rather than physical delivery. Silver can be traded on many exchanges. CME and NYMEX are some common exchanges. Commodities trading is facilitated by many brokers. Through the forex platform of the brokers, precious metals like silver and gold can be traded.
Here is how you can trade Silver
Silver is traded mostly in futures. Variety of futures contracts is traded through the exchanges. Standard and mini contracts consist of 5000 ounces and 1000 ounces respectively. If the current price of silver per ounce is $ 30 then one standard contract will be worth $ 150,000 and mini contract will be of value $ 30,000. The smallest possible move for silver trading is $ 0.001 per ounce which translated to $ 5 and $ 1 for standard and mini contract respectively. Traders with large account size can trade silver effectively and profitably. If you have a small account then a tick size of $ 1 will eat out a significant portion of your account as risk. As a conservative trader you should not risk more than 2% of your account on any single silver trade.
Apart from futures, silver can be traded as options. There are some exchange traded funds for silver. Trading such ETF is not a bad option. Through the silver mining company stocks, you can trade silver indirectly. Their price fluctuates according to the silver price.
Silver trades in a cyclic nature. The usability of the silver in industry makes its price move down when the economy is in bad shape and up in good times Silver price follows the movement of demand up or down Silver trading can also be performed based on the macroeconomic predictions. If you would like to get a fantastic silver trading broker, visit Tadawul Fx forex broker and look some of the benefits and drawbacks in regards to this trading platform.
Aspects that can move the silver prices
One indicator of the price of silver in future is currencies. Mexico is the second largest producer of silver. A significant amount of the silver in the world is traded in Peso which is Mexican currency. Silver and Mexican Peso are positively correlated and the correlation is very strong. The price of Peso will fall or rise if the price of silver falls or rises. This presents a unique opportunity to arbitrage silver trading. The price of gold is also a good indication of the price of silver. The prices of two precious metals gold and silver run in the same direction. Silver price falls in response to the fall in the price of gold. Some economists have come up with a theory that the price of gold should be 16 times that of silver as the amount of silver available is 16 times gold giving rise to gold to silver ratio. Check out is silver a good investment for a few aspect to consider why trading silver is an excellent investment.
Silver trading is a risky and uncertain game. If you play this game without proper knowledge of the rules of the game, it will result in gambling. Proactive ignorant trading will erode your account. Trading on a demo account first is a wise move. In case you’re also in Gold trading and would like to start venturing on silver trading, check out a review of Forex Gold Trader as this fx broker can provide you with both solutions for gold and silver trading.