Precious metal trading has become intensively popular among retail traders. In the past, only institutional traders dealing with this instrument. But brokers like Saxo have opened the door for retail traders to trade such assets. You can trade gold, silver, platinum, etc. with a well-reputed broker and take advantage of the price fluctuation. But this article is going to be about silver trading. People are so biased about the gold trading industry, that they often forget the big profit potential of the silver market. If you can take the perfect trades in the silver market, you can expect to make huge returns from your investment.
Silver trading is a very profitable business but people tend to make many mistakes. Even the pro traders make some common mistakes at silver trading and lose a big chunk of their capital. Let’s find out about the deadly mistakes made in the silver trading business.
Ignoring the price correlation
Trading silver and gold is a bit more advanced then currency trading. We all know the price gold is gold has a strong correlation with the U.S dollar. This fact applies to the silver market also. As silver is sold in the U.S dollar, a change in the interest rate in the U.S dollar creates a massive swing in the price. You have to remember the strong correlation between the U.S dollar index and the silver price. Some of the top traders in the United Kingdom depends on the correlation factor so much that they have multiple windows open all the time so that they don’t take any wrong trades. You should also focus on the news factors of the leading silver producing countries in the world. If their economy falls, you can expect a sharp fall in the price of silver.
Use this correlation as your advantage and you will be able to pull the trigger at the right time. Ignoring the correlation leads you to take a trade based on the technical data only. This will always result in heavy loss.
Ignoring the quality broker
You must find a great quality broker trade the silver market. You need the best CFD trading account so that you can use the advanced tools, technical data, and blend the news elements to find the quality trades. Price feeds are very important when you depend on the raw price data to find the technical level. If the streaming of the silver price is faulty or lags by a few seconds, you will miss a great profit-taking opportunity.
Brokers like Saxo know this very well and they always offer an exact price feed. You can expect to get the best price at the extreme market condition. So, never ignore the quality of the broker when you intend to trade silver.
Ignoring the risk factor
New silver traders often ignore the risk factors and take high risks. They consider the trend as the most vital element at trading and ignore the other variables. But the most important factor is risk exposure management. If you fail to manage the risk exposure effectively, it will be hard to overcome the losses. A few losing trades might blow up the trading account. This mistake is very common when a pro currency trader starts making trades in the silver market. They get biased with the existing trend and increase the risk exposure level to earn more money. This single mistake costs them big time.
Losing confidence in your strategy
As a silver trader, you can’t lose confidence in your trading strategy. Due to the strong trending nature of silver, traders are not used to dealing with losses. They think they know everything about this market and their system is perfect. But no system is perfect in this industry. Find a trade with a high risk to reward ratio and trade with confidence.