Silver speculation through a broker

Silver speculation through a broker

How to become rich trading silver through brokers?

Silver epic

Since ancient times people have been awed by this metal shine. Even when Judas betrayed Jesus Christ, his reward was 30 pieces of silver. Since the 16th century, Spanish galleons had been bringing tons of silver from their colonies. Silver price experienced the highest surge in modern times, from $4 in the early 2000’s up to $50 in 2011. Then, in five months it decreased by half. For now, the metal costs about $16 per troy ounce.

One of the main drivers of silver falling in price was the rejection of photo and film industry to use silver in film production. The industry started to use electronic storage media.

Prospects of silver

Silver is still largely used in medicine, radio and space industry, jewelry, and in banking. The start of an era of electric vehicles, according to some experts, can trigger the start of a new uptrend in silver market. Besides, the metal is actively used in solar panels. The rise of global living standards will push silver price up, as jewelry industry will demand more and more amounts of the metal. Bank silver bars will also be in demand.

Silver and gold

These are two different metals, but their prices move, as a rule, in accordance. It is very rare, when silver price goes up, but silver one goes down, or vice versa. These two precious metals are related. However, if gold has never decreased in price even by half since 2011, silver has fallen by 3 times. In some historical periods, silver price was growing faster than gold.

Silver and the world crisis

The crisis in 2007-2009 broke the uptrends not only for shares, but also for precious metals. Nevertheless, the stock prices started their fall already in 2007, silver began going down only in March, 2008. It had been growing in price fast before, as many speculators invested in precious metals. In November, 2008, silver started its ascending trend, when the stock market was still shaking.

Silver price sensitivity to dollar rate

In the stock market, silver, as a rule, is bought for American dollars. Cheap dollar pushes silver rate up. And vice versa, if the American currency grows in price, silver trend is likely to be downward. Of course, it is not always true. Silver can grow in price with rising dollar, and vice versa. That happens less often, though. /p>

Buyers of silver

The largest buyers of silver in the world are Great Britain, the USA, India, Canada, Switzerland, Japan and Italy. Great Britain is still the largest silver buyer in the world. Quite a lot of silver ore is mined in the USA, but its amount is not enough even for Great Britain. The Indians’ welfare is growing by the day. It is not surprising that the Indians buy large amounts of not only gold, but silver as well. Switzerland is the country of bankers, so it also needs an increased volume of the precious metal. Canada, Japan and Italy have started to use solar energy actively, so they will need a lot of silver. No artificial substitutes can yet compete with silver in the use of solar panels. It is especially true for Japan that is poor in energy resources.

Sellers of silver

“Latin American component” is very large in the price of silver. More than 1/5 of the global silver production is carried out in Mexico. This country can be proud of its largest centers of silver ore mining. Ore reserves in Las Torres, La Encantada, Hidalgo, Sacatecas, Chihuahua will hardly be exhausted. Even the Mexican peso often rises or falls, following silver chart. In Mexican town Taxco children still play with silver soldiers, and horses are shoed with silver horseshoes. Taxco and other Mexican centers of silver mining dominate in silver market. If there are a lot of miners strikes, then the metal can fast grow more expensive. Mexican officials also affect silver prices. If the Mexican authorities decide to raise duties for silver export, the metal price will respond immediately.

The main Mexico’s competitor in silver supply has been Peru since the Conquest times. In some periods, this country supplied more silver to the international markets than Mexico. The mines of Morococha, Gulkeniz, San Rafael, San Cristobal are high in the Andes. If a strong earthquake starts in Peru, silver price surges.

Chile

Another Latin American country, where silver is mined in the Andes. Its reserves in Chile are a little less than in Peru or in Mexico, but the country shouldn’t be seen as only a copper exporter. It is also a large participant in silver market. Law bills in Santiago can shake silver market as well.

Silver city in the Heaven

“As rich as Potosi”, there is still a saying in Spain. There used to be legends about this Bolivian city in the metropolis. In Potosi there used to be a Mint, a drama theater, magnificent temples and apartment houses. The rich mountain in Potosi has been almost exhausted. Miners habitually visit eateries, but they are so poor that cannot afford to buy good food. Churches are still open for visitors, but the miners can’t afford to buy a candlestick for God. However, when they go down into the mine, they always make offerings to the idol of El Tio, the mountain god. It likes tobacco, but now it has to settle for cigarette stubs. We may not have mentioned Bolivia as a silver producer, but its example shows that silver resources are limited on the Earth.

Speculators who are waiting for cheap silver should remember the example of Potosi: any natural resource, no matter how huge it is, is limited.

China

The amount of silver, produced in the country, is fully sufficient for internal use. The rest is exported to Japan, South Korea, the USA and other countries. China is a large consumer of silver. However, its need for silver is mostly regulated by the authorities. The demand in China is greatly dependent on the decisions in Beijing.

Russia

The largest mines are in Magadan area. About one third of silver is mined there. About 20% of silver is produced in the south of the Urals. In Norilsk and Primorsk area the metal is also extracted.

Poland

Poland is another European producer of silver. A lot of precious metal is mined there. It is exported to the EU countries, as a rule.

Australia

This country, occupying the whole continent, is rich in silver ore. In Queensland, Tasmania, and South Wales, there is produced much more silver than Australian economy can consume.

Where is silver used?

Silver is a good electricity conductor. It is the material for cables, electrical wires, but only when it is necessary. Wires are mostly made of copper and its alloys, as silver is very expensive.

Dishes and cutlery are made of silver. Coins used to be made of silver, now the metal is used for commemorative coins. It is used to make jewelry, earrings, chains, rings, bracelets. Silver is also widely used in medicine.

What is better to trade: silver or currencies?

The answer depends on traders. Most speculators think that it is easier to make profits in the commodity market than in the foreign exchange market. Silver can rise in price by the year. Something like that is not possible in Forex. Of course, it doesn’t mean that there will be no drawdowns in silver charts. Moreover, silver can fall in price by the year as well.

The way from $5 to $50 per troy ounce

Silver price moved from $5 to $50 not in a year. Nevertheless, the rollbacks had been followed by the price rise higher and higher since the 2000-s until 2001.

Should one use pending orders?

Professionals don’t usually use pending orders. If they think the price to be good for buying, they buy. Is it reasonable to put a pending buy order at a lower level and wait until the price reaches it? It may be, if a trader is not in a hurry and wishes to enter at the best price. But will the price go down? Nobody knows. Moreover, it might also happen that silver price can drop down to even $10 per troy ounce. It is unlikely, though.

“One to two” and “One to three” strategies

I learnt about the strategy on dealing center training course in 2007. Can it bring profits? It can, if you identify the trend direction correctly. In most cases, this way to trade is not efficient, especially in short timeframes. Moreover, you mustn’t risk per trade more than 5% of the capital, no matter how attractive this or that trade may seem to you.

Pyramiding in silver market

Safe pyramiding is opening a chain of positions in the same direction. To do it, one should buy (or sell) by an optimal lot, and then add more and more to the purchases (sells), setting stop orders at breakeven levels for the previous trades. This strategy can be quite efficient in silver market, if applied not too often.

Love of silver

On the exchange, there are many traders, who are “in love” with a certain instrument. There are also many silver “fans”. Nevertheless, one shouldn’t stick to one asset too much. A speculator should aim to make profits, not to prove anything to anybody.

Trading on fundamental data

Some traders work based solely on fundamental data. What is even more surprising, there are traders, who don’t even monitor the charts. These people work by means of their personal assistants. A trader can ask the secretary, how much silver costs now? And, based on the answer, bet on the rise or the fall of the price. Such traders confess that they are confused by the charts.

Who shouldn’t trade silver?

The list of traders, who shouldn’t trade in silver market, is rather long. However, it doesn’t differ from that of people, who shouldn’t trade at all. Gamblers are the most vulnerable category, they shouldn’t even come close to any trading charts. Alcohol or drug addicts mustn’t trade as well, even if they gave up. If a person is addicted to gambling, a psychiatrist will help. Although, not everybody and not always.

Price gaps

Price gaps are rather rare in precious metals markets. As a rule, a slight swing occurs when important news is released or a new trading week opens. One shouldn’t be afraid of gaps in silver market. They usually do little harm. However, when trading with large lots, a slight price gap can cause considerable losses.

Japanese candlesticks, bars, line chart

I don’t recognize line chart and never use it. Most traders apply Japanese candlesticks that are quite informative. Others like bars more. Any way, one can use anything, provided that trading is profitable.

Bullish Belt Hold, Bearish Belt Hold and other candlestick patterns

In silver market, as well as in other markets, graphic patterns, like Morning Star or Evening Star, inform traders accurately enough. Bullish Belt Hold and Bearish Belt Hold also help to predict future price moves. It was noticed, the most informative are daily candlesticks. 4-hour ones are less accurate.

Inside

The hunt for inside information is everywhere. Silver market is no exception. For example, suggested agreements in the parliaments of Lima or Mexico about export duty increase or reduction for silver ore can be valuable information. It is difficult to obtain, though.

Contracts For Difference and Options

Most traders prefer direct contracts to the options. However, there many of them who like trading options.

Seasonal factor

There is no apparent seasonal factor in silver market. However, gold chart is to some extent cyclic (because of seasonal demand in India). That influences the price of silver that is often follows gold price.

MA, Stochastic, Elliot Waves, RSI, EMA

A huge lot of indicators, oscillators, technological innovations can somehow increase the chances of success in the business. However, in some timeframes, the signals from this or that indicator or oscillator may make things only worse.

All is not silver that grows in price

Silver may be falling in price for years, as history proved. Silver started its multi-year bearish trend in 2011. And the forecasts, when silver cost $49, were the most positive: $60 and even $70 per troy ounce.

Danger of selling in silver market

If silver price is not high, open short positions in the market is rather dangerous. Any time the price can start rising and move upwards for a long time.

Trend lines. Support and Resistance levels

Most beginners use trend lines to identify support and resistance levels. It can be rather profitable sometimes.

Speculative component in silver market

In precious metals market, the price is formed not only of physical purchases, but of speculative ones as well. Their proportion is often a few times larger than that of physical demand.

Position and intraday trading

Professionals, as a rule, prefer position trading. It is difficult to make profits intraday not only in silver market, but in any other market as well. I haven’t succeeded for 12 years. In the long run, day-trading resulted only in losses.

Commission fees

Silver is more expensive to trade than gold because of commission fees. However, silver often grew in price faster than gold. Of course, in position trading, commission fees can’t be a big problem.

Murphy’s Law in silver market

This law works not only in this market. The price reached stop loss and then went in the desired direction? That happens quite often. Over the years, trader improves the professional skills, and this “law” works less and less often.

Silver and Forex

Speculative component in silver market is less than in the foreign exchange market. That is why, many traders prefer precious metals to currency pairs. There can be long-term one-directional trends, which is impossible in Forex.

Silver and stock market

Speculative component in silver market is larger than that in the stock market. Nevertheless, many traders prefer silver market to the stock market. The reason is simple: gaps don’t cause disastrous losses in silver market. In stock market, only indexes move relatively safe, without gaps. All securities are at risk to some extent.

Advisors. Should one rely on robots?

Technical analysis, as a rule, is the same for all instruments. At least, in most books there is no difference for trend lines in Forex and in silver market, for example. Advisors are usually designed multi purpose as well. However, there is still a great difference between these markets. It is unreasonable to use first available advisor at random. There are a lot of free advisors on the Internet. More than 99% of advisors on the Internet prove to be “junk information”. As a rule, advisors apply martingale strategy that involves extremely high risks. Martingale will always be profitable, provided there is an infinitely large capital. Nobody holds such an amount of money, so the risk to lose all your money is extremely high. It is especially dangerous to apply martingale to open sell orders. The decline of silver price is limited. It unreasonable to expect that silver will only become cheaper. Everything is limited, including silver price fall.

What to buy silver for: dollar or euro?

Many traders prefer buying silver for dollar. The reason is that the price forecasts are made in dollars. In some historical periods, it was more advantageous to pay for silver in euros than in dollars, which is not surprising.

What to do in silver market now?

Silver cost about $16 per troy ounce in late 2017. Many experts claim it to grow cheaper. According to Black-Sholes formula, the only formula that really works on the exchange, the price can move the equal distance both upwards and downwards. Yes, the formula is simple, but nothing else has been invented yet. However, the price fall in silver market is limited. The metal price can’t go down to $1 per troy ounce, that is lose 15 USD. At the same time we will witness the price rise by $15, up to $31 per troy ounce. Of course that doesn’t mean, it will happen soon.

Apparently, it would be sensible to put pending buy orders, for example, for $15.50 or for $15 per troy ounce. However, nobody can guarantee that silver will fall in price to this level.

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