5 Tips to Improve Odds Of Success When Trading Silver
One of the best ways to participate in the financial markets is by trading commodities. They have a high degree of volatility relative to currencies, making them perfect for short-term and long-term traders.
You can trade multiple commodities out there, but one of the better-known ones is Silver. But like every other tradable asset, you need some understanding of the markets to trade in Silver. Below are some tips you can use to improve your odds when trading Silver.
Understand the factors that give silver value
Before you start trading Silver, you must first understand the factors that give it value and its vital price drivers. By understanding Silver’s mechanics, you can take advantage of the news and other market factors and improve the odds of success.
Luckily, this information can be easily accessed when using a trading platform like PrimeXBT. PrimeXBT has a detailed guide on how to trade Silver, and if you read them well, you should be able to improve your silver trading skills.
Learn the basics of risk management
Silver and commodities, in general, are not exempt from unpredictable price movements that characterize the financial markets. For instance, Silver may be rising, and some unrelated economic news can instantly make it tumble.
To deal with these uncertainties, it is best to understand risk management. Among the critical risk management ideas, you need to internalize are how to use stop loss, take profit tools, and choose the correct lot size when trading.
Be in tune with macro-economic factors
Silver and gold are two commodities that are used as a hedge against inflation. These commodities tend to do well in bear markets and periods of high inflation. They are perceived as a strong hedge against inflation and market crashes. This information is essential as it can help investors make the right decisions on whether to actively trade Silver, or hold it longer.
If the macro-economic climate points to a prolonged bear market, it would make sense to hold silver long-term. That’s because Silver could rise for months at a time in such periods. However, when markets are booming, Silver can stagnate or trend lower. In such a scenario, it would be best to take advantage of more short-term price fluctuations in the market.
Understand the power of borrowed capital
It pays to understand how to use borrowed capital from exchanges in the financial markets. However, this capital is a double-edged sword. If you use it the wrong way (taking an excessive amount of it) it can be a risk.
That’s because the more of it you take, the more susceptible you are to being margin-called if the market goes against you, even by a small margin. Only take an amount of borrowed capital that can magnify your silver gains while keeping you within an acceptable level of risk.
Manage your emotions
Trading, whether forex, equities, or commodities like Silver is all about emotions. You need to have the emotional strength to handle the market moves without getting fearful or greedy and compromising your trade. Getting the hang of your emotions when trading is no mean feat.
It takes time and practice, but you get better at it over time. One of the ways to practice managing emotions is by investing what you can afford to lose comfortably. This eliminates fear because whether your trade wins or loses, it has no impact on your lifestyle.
The other way to do it is to find a working strategy and practice it until you get comfortable. This guarantees that you confidently enter trades, knowing well what to expect regardless of the market noise.
Recap
Silver, like other commodities, is highly volatile. However, you can get pretty good at it with the proper knowledge and a whole load of training. Among the key areas you need to perfect before trading silver are risk management and understanding its critical value drivers.
