Trading gold and silver has become increasingly popular over recent years.

More and more Forex brokers are offering trading in gold and silver, as well as some other precious metals such as platinum and palladium, but gold and silver take up most of the speculative interest in this category. In addition to trading precious metals virtually, there are a lot of offers available to buy and sell gold and silver bullion and take physical ownership in the shape of coins, ingots and other collectables; but this article will focus on the online trading of gold and silver.

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Unfortunately, a lot of people lose their minds a little over precious metals, especially gold, forgetting that it is just another commodity to trade. There are two main reasons why people go crazy over gold: To trade gold and silver successfully, it is important to put thoughts of the commodity itself out of your mind and just focus on the behavior of its price. Gold and silver prices are traditionally quoted in U.

Dollars, but some brokers will price it in Euros and other currencies. If you do trade these metals against currencies other than the U. Dollar, do keep in mind that most of the world watches it against the U.

Dollar, so keep an eye on what is going on there. One of the main reasons why trading gold and silver can be more attractive than trading Forex is that these precious metals usually move in bigger increments than Forex currency pairs. The major Forex pairs typically fluctuate in value by much less and have a greater tendency to revert to mean values.

For example, at the time of this writing, over the past 1, days the four major currency pairs move by an average of 1.

Dollars has an average of 1. When it comes to long-term price movements, gold and silver beat Forex hands down: This means that even though you might need wider stops than in Forex trading, there is often much more potential profit on the table.

However, leverage offered is typically considerably lower compared to Forex currency pairs, and overnight financing charges are typically higher. If you are reading this and thinking that trend trading gold and silver is the way to go, you are probably on the right track: This result is arguably distorted, however, by the fact that the precious metals have generally been buoyant against national currencies, and here we get close to the hearts of those who believe that all non-convertible, fiat currencies are inevitably eventually debased against widely accepted stores of value such as precious metals.

It is certainly true that it is hard to find a strategy which has been profitable in recent history over the long-term which is based upon shorting gold and silver against currencies. Time of day, contrary to popular myth , is not especially important. Which is a better investment, gold or silver?

This might be a mistake, as recent years have seen even larger moves in silver than have been seen in the price of gold. While one reason for this is psychological as gold looms large as a store of value in the human imagination.

At the time of writing, most brokers offering gold and silver typically charge about 50 cents on gold, which equals about 0.

When you consider the larger movements though, it is easy to conclude that they are still worth trading. Gold and silver have a high positive correlation, i.

To give you an idea as to how this has worked in recent years, look at the chart below showing both against the U. Gold is marked in red, and silver is marked in blue:.

This does not mean that you should not be prepared to trade both gold and silver, but what it does mean is that you should make sure that you do not have too much of both in the same direction at the same time.

For example, instead of having 1 unit of long gold and 1 unit of long silver, it would probably be better to make sure you have about 1. Finally, how could you build a trading strategy for these precious metals?

Silver Trading - Your Guide to Trading Silver on Forex

Trend trading strategies typically have produced the best results. Well, they both tend to move fast and quite explosively, so buying new highs in strong uptrends when the price is above its level from 6, 3 and 1 months back has been a successful method, especially when using volatility rather than candle-based stops. With commodities such as these, it has been very profitable to sit back and let winning trades run and run.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U. Learn more from Adam in his free lessons at FX Academy. Registration is required to ensure the security of our users. Login via Facebook to share your comment with your friends, or register for DailyForex to post comments quickly and safely whenever you have something to say.

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The data contained in this website is not necessarily real-time nor accurate, and analyses are the opinions of the author and do not represent the recommendations of DailyForex or its employees. Currency trading on margin involves high risk, and is not suitable for all investors.

As a leveraged product losses are able to exceed initial deposits and capital is at risk. Before deciding to trade Forex or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite. We work hard to offer you valuable information about all of the brokers that we review. In order to provide you with this free service we receive advertising fees from brokers, including some of those listed within our rankings and on this page.

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Gold and Silver Price Behavior To trade gold and silver successfully, it is important to put thoughts of the commodity itself out of your mind and just focus on the behavior of its price. Gold and Silver Trading Method If you are reading this and thinking that trend trading gold and silver is the way to go, you are probably on the right track: Gold is marked in red, and silver is marked in blue: Gold and Silver Trading Strategy Finally, how could you build a trading strategy for these precious metals?

Currency Pairs Gold Silver. Adam Lemon Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch.

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