Silver Trading
One common method of portfolio diversification is through trading in commodities and precious metals like silver. The guide you need to trade the silver market is right here.
Why Trade Silver?
A hedge against inflation
While currencies can lose value due to inflation, silver’s value is determined by other forces. Like other commodities and precious metals, silver is not subject to the same economic and market forces as other assets.
Demand
Another factor contributing to the popularity of silver is the fact that the technology sector, which accounts for about half of total demand, drives up prices even when investment demand is weak.
Safety net
Due to the fact that it is not influenced by the same forces as traditional assets, silver, like other precious metals, is frequently viewed as a haven in times of financial stress.
What affects Silver prices?
Trading Tips in Silver Market
Trading Silver in Practice
Let’s suppose that your technical analysis on the daily chart of silver indicates a high probability for the price of silver to fall.
You sell 1 lot (5,000 oz) of XAG/USD at the price of $16.38. This position size equals $50 profit or loss for every 1 cent movement in the price of silver.
Winning Scenario
Losing Scenario
Later that day silver is trading at $16.25 and you decide to close your position – a classic short strategy that has paid off. The profit made on the trade is calculated as follows: change of price in cents x $50 = 13 x $50 = $650.
Alternatively, the market doesn’t go your way and the price of silver increases and does not decline by the end of your contract. Silver is now at $16.99 per lot, so your losses on the trade are calculated as follows: change of price in cents x $50 = 61 x $50 = $3050.