Trade Silver Online

Trade Silver through our MetaTrader 4 platform

Gain access to live silver prices with FXTRADING.com and trade CFDs, tight spreads and fast execution via our MetaTrader 4 platform.

A Primer On Silver

Of all the metals, silver is perhaps the most versatile among its peers. As a precious metal it has served as currency and a store of wealth for thousands of years, although its historically lower price has made it more accessible (and therefore in greater demand) than gold. It is also the most reflective of all the metals, sending back 95% of light that hits it and making it ideal to use as a backing for mirrors.

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An excellent conductor of heat and electricity, silver has many uses spanning multiple industries. Just to name a few. silver is widely used in electronic components such as cars, microwaves, televisions and circuit boards and silver salts are also used to capture images in photography and x-rays. And being such a highly resonant material also makes it perfect for high quality bells. Try tapping an US coin minted before 1965 when coins were made with 90% silver and hear it for yourself.

 

Market Drivers for Silver

There are a multitude of drivers for silver investors to keep tabs on, such as mining and production costs, investment, demand, industrial demand, energy costs and even jewellery demand. Yet for traders of much lower timeframes, here are some of the most common themes to keep an eye on.

Supply and Demand
It is estimated that industrial production accounts for over 50% of silver demand. It remains a popular choice for jewellery and of course silverware. With silver in limited supply whilst demand continues to increase, silver bulls have a strong case for higher prices over the coming years. For this case to be undermined, a vast amount of silver supply would need to enter the market to more than absorbed this growing demand. At present, this appears to be unlikely.

Yet the effects of supply and demand are also present over much shorter time horizons. If a strike were to put a silver mine temporarily out of action it could see silver prices spike higher. As would the announcement that silver has found another industrial use, as it would suggest demand is to rise further still.

USD
With spot silver (XAGUSD) being priced in US dollars, then the dollar is a strong factor to consider behind silver prices. They mostly share an inverted correlation, although its not one of the cleanest. But it is safe to assume that a surging USD can weigh on silver prices and send them much lower if demand for silver drops. Or a falling USD can support silver prices or send them higher if demand for silver is also rising.

Economic Data
A slew of weak data from China could suggest aggregate demand for industrial products were on the decline, in turn weighing on silver demand and prices. And the opposite could be true; if global growth and consumption are rising, demand for industrial products and therefor silver prices could rise. Therefore, traders keep a close eye on macro-economic data sets which can move silver prices.

How Does Silver Trading Work?

A Silver CFD allows traders to speculate on bullish (rising) or bearish (falling) markets. This is not easily achieved with the physical metal, where transaction costs and time are significantly higher.

As CFDs are derived from an underlying market (making them a form of derivative), traders can use leverage to significantly lower margin requirements and trade live market prices without owning the underlying market.

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Long example: Silver (XAGUSD)
A trader buys 1 contracts of silver (5,000 ounces per contract) at USD $15.15

  • If XAGUSD rises to $17.75 the trader could exit for a profit around $7,000
    • (# contracts x contract size) x (exit price – entry)
    • (5 x 5,000) x ($17.75 – $15.15)
  • If XAGUSD falls to $13.75 the trader could exit for a loss around -$13,000
    • (# contracts x contract size) x (exit price – entry)
    • (5 x 5,000) x ($13.75 – $15.15)
  • A 1% margin requirement with 100:1 leverage requires $757.50 of capital
    • (# contracts x contract size x price) / leverage
    • (5 x 100 x $1,726) / 100

 

Short example: Silver (XAGUSD)
A trader sells 1 contract of silver (5,000 ounces per contract) at $16.74

  • If prices fall to $16.13 the trader could exit for a profit around $3,045
    • (# contracts x contract size) x (entry – exit price)
    • (1 x 5,000) x ($16.74 – $16.13) 
  • If silver rises to $17.06 the trader could exit for a loss around -$1,610
    • (# contracts x contract size) x (entry – entry)
    • (1 x 5,000) x ($16.74 – $17.06) 
  • A 1% margin requirement with 100:1 leverage requires $837 of capital
    • (# contracts x contract size x price) / leverage
    • (1 x 5,000 x $19.25) / 100

 

Costs associated With Silver CFDs

Spread:
The spread is a nominal transactional charge paid when entering the trade. As FXTRADING.com source quotes from top tier liquidity providers, we offer highly competitive spreads, which are simply the difference between the bid and ask prices. Spreads are variable and typically tighter during periods of high trading activity such as the London or New York sessions, and wider during Asia and public holidays (if the markets are open).

Swap:
Swaps are either a daily holding cost or rebate and are derived from the interbank rate of the currency the market is traded in. As XAGUSD is traded in US dollars, the US interbank rate is used to calculate the daily swap.

As swaps are calculated 365 per year and spot prices are generally settled two days later, Wednesday is a ‘triple swap’ day to account for the market being closed over the weekend.

Swaps can either be a positive (debit) or negative (credit) amount applied to your floating profit or loss, depending on if you are long or short a market. To access swap charges in MT4, go to the “Market Watch” window in your MT4 terminal, right click over a market and select “Specification”.

Advantages of Trading Silver

  • Trade long or short
  • Trade on margin
  • Trade the gold/silver ratio
  • Hedge Out Market Risk
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Trade long or short
By trading long or short, a trader is in a better position to trade with the underlying trend regardless of its direction. This is a luxury not always present with the underlying market.

Hedge Out Market Risk
To ‘hedge out’ market risk means to lower or remove it. Traders will hedge if they want to temporarily remove risk without closing their positions. For example, an investor holds physical silver which they intend to keep for several years, yet they are concerned price may correct over the near term. To protect their profits to decide to short a silver CFD of equivalent valuer to their physical silver holdings. This way if silver prices are to fall, the profit made on the silver CFD should negate profits potentially given back from their physical silver position over the same period. The same technique can be used to hedge against a silver ETF or group of silver mining stocks, whose prices are sensitive to spot silver.

Another use would be to hedge the Silver CFD itself. For example, a trader could be long 5 contracts of silver but want to reduce their risk over the weekend, so they short 5 silver contracts. In doing so they effectively reduce their margin requirements to $0 and have fully locked in their floating profit or loss.

Why Trade Silver with FXTRADING.com?

  • Competitive Spreads
  • Trade with EAs (Expert Advisors)
  • No Dealing Desk Intervention
  • No commissions (Standard Accounts)
  • Low Commission (Pro Accounts)
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Competitive Spreads
Trade tight spreads sourced from out top-tier liquidity providers.

Trade With EAs (Expert Advisors)
Trade silver with the power of automation by using EAs (expert advisors).

No Dealing Desk Intervention
We do not provide requotes of interfere with your trades. FXTRADING.com are here to facilitate your trading, not hinder it.

Multiple Despot Currencies
Overseas investors can still trade with an ASIC regulated broker, whilst using their domestic currency.

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