Silver, like gold, is often used as an investment, and the prices of the two metals have been known to move correspondingly. However, silver is far more in demand as an industrial asset than gold, so events in the technology sector have far more of an effect on its price. Silver trading strategies vary, but trend following and range trading tend to be the most popular.
Silver is a highly tradable asset because of its high liquidity. Intraday traders enjoy the fact that silver has been more volatile than gold during the past due to it being a smaller market in comparison. This volatility allows them to take advantage of big intra-day market swings. Silver trades with clear chart patterns due to its high liquidity.
There are a number of silver trading strategies, but Trend Trading and Range Trading tend to be the most popular among traders of all levels.
A trending market is one that is consistently making new price extremes. For example, an up-trend can be seen by identifying a series of higher highs and higher lows. A down-trend market is identified with a series of lower highs and lower lows.
Trading silver can be made easier when you understand the benefits of trend following. There are different techniques to determine the direction of a trend like drawing trend lines or using moving averages. You can take advantage of the volatility to earn huge profits. Just look at the chart of gold and you realize that this might be the best timing.
A range trading strategy is used when a market is in consolidation, meaning during a period when markets tend to be range-bound.
The silver market does not always trend upwards or downwards, it often enters periods of consolidation when the prices move ‘sideways’. This is not bad news for traders as there is a strategy to trade markets in consolidation. How does it work? First determine the range, then filter your signals and finally execute the trades, but don’t forget to set stop-losses and take-profits.
Silver has its own price drivers that you’ll need to watch when trading. Dollar, inflation and financial or political crises are among the major ones to follow. But there is more. Silver also has a wide range of industrial uses, and is a core component of electronics, mirrors, dental alloys and more. Demand for silver derives from industrial entities and from investors as a safe-haven asset.
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