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How To Trade & Invest In Silver: A Beginners Guide
While gold is the most well-known precious metal, silver trading is also popular among traders.
Like gold, silver serves as a store of value. It is cheaper than gold, so many investors find it more accessible. Though the two metals often move together, the price trends can sometimes differ.
Read on to learn more about investing in silver and how you can take advantage of its convenient investment options.
What are my investment options for silver trading?
The first step in trading silver is choosing the best asset for your plans and goals. Your choices will include:
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Physical silver like coins or silver bullion : You should only purchase these from a reputable dealer. |
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Silver ETFs : These are available via stock exchanges. This is a way to buy silver shares without purchasing physical coins or bullion. |
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Silver mining stocks : These assets track the price of silver reliably. |
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Silver futures : These contracts focus on the future price of silver at the expiration date. The price may be different from the spot market. |
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The spot market : Silver trades like a forex pair with major currencies like the USD using the XAG. XAG/USD is the most popular spot market. |
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Silver CFDs : A silver CFD tracks the spot market. It allows you to track XAG/USD without actually purchasing silver. |
Create a silver trading strategy
After you choose your asset, you need to learn how to trade silver and the factors that affect its price, such as:
Strength of the US dollar
The USD is the world’s benchmark currency. When the dollar falls in price, it usually causes the price of both gold and silver to go upward as demand increases.
Central banks
While they don't set rules for silver trading, they can increase interest rates and make rules about currencies that could cause the demand for metals to increase.
Political uncertainty
Political uncertainty in a country is also a major factor that affects the price of silver. People seek safe investments like gold and silver during uncertain times. The idea is that they will hold value better than other investments.
Inflation
Inflation is one of the main reasons traders invest in silver. Inflation lowers the value of currencies like the USD. However, the metal maintains its value in the face of declining currency strength, allowing investors to beat inflation.
Understanding the gold/silver ratio
The gold/silver ratio measures the value of silver in terms of gold. The figure for this ratio is the number of ounces of silver it takes to purchase one ounce of gold. For example, if gold is $1,000 per ounce and silver is $20 per ounce, the ratio would be 50:1.
In the long term, the values of these metals move together. However, the gold/silver ratio can be significant for day traders using futures and CFDs. This is because the previously mentioned factors can cause the markets to move independently from one another in the short term.
Learning how to trade in silver with indicators
One of the first things you will need to determine before silver investing are the indicators you will implement as part of your trading strategy.
Here are four silver trade indicators you can use for day trading and why you may use them:
Indicator |
Why? |
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Moving Average Convergence/Divergence (MACD) |
Measures the momentum of a trend by comparing exponential moving averages (EMAs). Traders must find instances when the MACD crosses above the signal line (to buy) or below it (to sell). |
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Relative Strength Index (RSI) |
Measures the speed of price changes, which you can use to gauge the supply and demand of silver. |
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Bollinger Bands |
Contain two lines, which are two standard deviations away from the moving average, providing insight into overbought and oversold levels. |
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Moving Averages (MAs) |
Identifies the market direction and provides trading signals. Some traders use long-term and short-term moving averages to create buy signals. |
TMGM - Your number one broker for investing in silver
When you are ready to find a place to buy silver, consider TMGM. We can offer:
CFDs for trading precious metals
Transparent pricing and policies
Over 10+ liquidity providers and NY4 services for fast orders
Access to MetaTrader 4, one of the most sophisticated trading platforms
We also provide traders access to several market types, including:
If you have questions or concerns before opening your account, you can contact us 24/7.
Frequently asked question
If you trade silver CFD products, you must meet the minimum deposit requirement for your broker. If you are investing in silver using CFDs with TMGM, you will need to deposit at least $100. However, $500 is the recommended amount. This allows you to take potential losses without washing out your account.
The silver spot market is active 24 hours per day. The market is most active when major stock and commodities markets are in session.
You can potentially earn returns if you have a well-tested silver trade strategy and proper risk management practices. Silver is like any other financial asset, so you must research the market and find profitable trading opportunities.