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Silver Trading

Trading commodities and precious metals like silver is a popular way of diversifying a portfolio. Here's your tutorial for trading the silver market.

Why trade silver?

Hedge against inflation

Like other commodities and precious metals, silver is not subject to the same economic and market forces as other assets - where currencies can lose value due to inflation, silver's value is dictated by other forces.


Another reason why silver is popular is that around half of the demand for silver is derived from the needs of industry, in particular the technology sector - which keeps prices up even when investment demand is low.

Safety net 

Like other precious metals, silver is often seen as a refuge in times of financial stress as it is not subject to the same forces as conventional assets. 

What affects silver prices?


Supply and demand

Like any other commodity, the price of silver is subject to the laws of supply and demand – and given silver’s exposure to many other industries, it is often correlates with the health of the global economy overall.


Silver’s many applications in the technology sector mean that that booms in asset prices in this industry in particular drive up prices.

US Dollar value 

Since silver is quoted in US Dollars, an increase in the value of dollar automatically adds negative pressure on the gold prices. 

Price of gold

While its causes are debated by economists, there is a commonly-observed correlation between the price of gold and silver. When one goes up or down, the other tends to follow – despite being driven by different underlying forces.

Silver market trading tips

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

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.

Losing scenario

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.

Practice trading metals with $25,000 virtual funds
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