Both in today’s modern world and historically, commodities have been basic building blocks of the economy. What are commodities? Keeping things simple, commodities are raw materials that are used everyday for daily uses.

When commodity trading is mentioned, silver is one of the first things to come to mind. In the list of “soft commodities”, silver is one of the most popular precious metals to trade in today’s world.

This commodity’s low correlation with other commodities and its pricing related to flat currencies during the recent financial crisis are all building blocks to that a very important conclusion: silver is considered a currency in the Forex market and is traded in a similar way to other currency pairs. The difference however between other currencies and silver is that silver can only be traded in terms of USD.

Why Silver Futures

Hedgers, including manufacturers and consumers often use silver future contracts to hedge against price movements and to reduce price risk.

The second categories of traders who trade silver futures are speculators. According to their speculation of silver prices they buy or sell silver futures.

One of the biggest advantages of trading silver futures is the high level of leverage that comes with the contracts. With a higher level of leverage, speculators experience potentially higher return on investment with futures contracts.

Moreover, greater transparency, financial integrity and flexibility are offered by futures contacts. This is due to the fact that they are all traded at centralized exchanges globally.

How does a silver futures contract work?

Silver futures contracts are standardized according to quality, quantity, and delivery location and time trough a futures exchange

The basics of silver futures trading include the two positions traders can take; long and short. A short position in futures contracts obligates the trader to deliver a specified amount of silver. And reversely, a long position is an obligation to received silver in the amount specified in the contract. However, the most common strategy for trading futures is when a trader sells the same contracts they had bought, or vice versa, before the expiry date of the contract. Speculators often use this strategy based on their speculations, and open short/long positions accordingly.

To trade silver futures successfully, PCM International offers not only the best futures trading platform, but also all the tools and information needed for educated and intelligent trading.

Silver futures

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• Margins
• Delivery related information