How to Trade & Invest in Silver

Trading and investing in silver offers opportunities to potentially profit from price movements in the commodity. It can also be added to a trading portfolio for its ability to diversify itself from price movements in equities and other assets. Here's your step-by-step guide: 

1. Understand what silver trading and investing are
2. Open a brokerage account
3. Select how to trade or invest in silver
4. Open your first position 
5. Monitor, manage, and close your trade
6. Silver futures trading example
7. Silver ETF/stock trading example

1. Understand What Silver Trading and Investing Are

Options, futures, stocks, or ETFs are utilized by traders when speculating on prices. Silver is traded by traders for several reasons: 

• Speculation on price movements 
• Portfolio ownership of precious metals 
• Hedging against economic instability 
• Trading against central bank policies 

Rising and falling prices can allow you to potentially profit from trading silver. You can go long (buy) when you expect prices to rise or go short (sell) when anticipating losses. Your profit depends on correctly predicting market direction, but options and options on futures strategies can allow you to potentially profit on changes in volatility as well. 

Long-term investors who focus on wealth preservation and growth use silver stocks, ETFs, mining stocks, and physical silver to benefit from appreciation over time. 

What Drives the Price of Silver? 

Numerous market and economic factors influence silver prices, including supply and demand, interest rates, inflation, currency fluctuations, and market sentiment. Due to silver’s history of being an asset held physically in times of uncertainty, risk-off environments in the market typically benefit silver prices.

2. Open a Brokerage Account

tastytrade’s innovative platform featuring competitive commissions, powerful analytics tools, and trader-focused intuitive design allows you to trade silver products and kick off your trading journey. Our platform provides real-time market data, charting tools, and seamless platform navigation and order placement for all your silver trading needs.

3. Select How to Trade or Invest in Silver 

There are numerous ways to gain exposure to the silver market on tastytrade, suiting your trading needs whether you’re a beginner or experienced trader. 

Silver Futures 

Silver futures are one of the primary avenues used by traders to speculate on the price of silver. tastytrade offers two silver futures products: 

• CME Silver Futures (/SI) – Represent 5,000 troy ounces of silver 
• CME Micro Silver Futures (/SIL) – Represent 1,000 troy ounces of silver 

These contracts trade nearly 24 hours a day, 5 days a week, and are both physically deliverable. 

Silver ETFs 

Silver exchange-traded funds, or ETFs, track silver prices without requiring physical storage or delivery. They are generally made up from a basket or collection of stocks that track the price of silver and/or silver miners. These exchange-traded funds offer the liquidity of stocks while providing direct exposure to silver prices. 

Silver ETFs usually require less buying power than futures, making them a great option for smaller-account traders to gain exposure to the market. The iShares Silver Trust (SLV) and the SIVR Physical Silver Shares ETF (SIVR) are two notable silver ETF examples. 

Silver Stocks 

Silver stocks are shares that represent ownership in companies that have exposure to silver, mine silver, or conduct business related to silver distribution. These stocks offer traders exposure to silver prices through equity ownership. Silver and silver mining stocks provide: 

• Potential dividend income 
• Exposure to silver price changes 
• Company-specific exposure and growth potential
• Benefit of portfolio diversification 

Besides considering silver prices alone when picking a silver stock, also take into account traditional metrics used to evaluate equities. These can include fundamental and technical factors, depending on your trading style.

Silver Options on Futures 

Long silver options give you the right, but not the obligation, to buy or sell silver futures at predetermined prices. Only the main CME silver futures contract (/SI) has options available. Options strategies range from directional bets to multi-leg positions that allow you to take advantage of volatility as well as prices. Options trading benefits: 

• Various strategies available based on risk
• Opportunities for time decay (short options strategies)
• Volatility trading potential

4. Open Your First Silver Position

Ready to trade silver? Follow the steps below: 

1. Research current market conditions: using technical and fundamental analysis 
2. Choose your trading instrument: based on risk tolerance and price and volatility assumptions 
3. Determine position size: according to your account size
4. Identify entry and exit points: before you enter the trade
5. Place your order through the tastytrade web-based platform, desktop platform, or mobile platform

5. Monitor and Manage Your Trades 

Actively managing your positions allows you to protect your capital and can help prevent bigger losses.

• Monitor your P/L in real time
• Price alerts notify you of significant moves 
• Risk analysis tools to evaluate portfolio exposure 
• Mobile app access allows easy management away from your desk

Silver Futures Trading Example

A silver future trade depends on whether you go long or short. A trader will benefit from a long silver futures trade if the price rises after they buy it. When selling a silver futures contract, the trader would profit if prices dropped after they sold it.

You can manage your silver futures trade anytime the market is open. There are no pattern day trading (PDT) rules for futures because they are not classified as a security. 

When opening a trade, you’ll first enter silver’s ticker symbol /SI into the ticker symbol box. The platform will generate the active month’s quote in the quote box. Clicking on the “Ask” to go long a contract, or on the “Bid” to go short a contract. The trade ticket at the bottom of the screen will populate automatically. At this point you can adjust the quantity, price, and order type. Click on “Review & Send”, check commission and fees, and click “Submit” when you are ready to enter your trade. 

1. Ticker symbol box
2. Quote information
3. Bid (sell), Ask (buy) 
4. “TRADE” tab
5. Order ticket 
6. Review & Send

Silver ETF/Stock Trading Example

The process is similar for buying or selling a silver ETF or stocks. Locate the search bar on the top left and enter the example symbol for the iShares silver ETF or silver stock of your choice. 

To go long, click on the “Ask” price. To go short, click on the “Bid” price. The order ticket will automatically show up on the bottom of the page. You can adjust the quantity, order type, and time-in-force. You can also adjust your limit price in the trade ticket. Check commission and fees. Once you are happy with your order, hit the “Review & Send” button on the bottom right of the trade ticket. 

1. Ticker symbol box
2. Quote information
3. Bid (sell), Ask (buy)
4. “TRADE” tab
5. Order ticket
6. Review & Send