Silver Binary Options Trading
Silver is a highly conductive and malleable metal and it is used in different industrial applications including jewellery as well as in the manufacture of electronics. Although silver is not as widely available as gold, its supply, demand and market prices influence the movement of global currencies. Like other commodities, the price of silver depends on the metal’s demand and supply.
Why trade Silver commodity
• High volatility, high returns
Due to the tight demand and supply market for silver, the prices of this commodity tend to undergo wide price fluctuations daily. This high level of volatility can offer lucrative opportunities for the binary options trader.
• Minimal margin requirements
Compared to gold, silver is relatively easy to trade due its low margin requirements. This means you do not require a large amount of capital to start trading silver. At the same time, most binary options companies provide great leverage, making silver a profitable addition to your portfolio.
• Safe commodity
Many investors consider silver as safe as gold. The safety of silver as a trading commodity allows you to use it as a shield against economic downturns and inflation. During such financial instability, the value of silver remains stable.
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Type of available binary options for Silver commodity
The common binary options contract types for Silver are:
• Basic Call/Put options: You need to predict whether the price of Silver will move up or down prior to the expiry time.
• Touch options: You are required to predict whether the price of Silver will touch the given strike price prior to the expiry.
• In/Out: You need to predict if the price of Silver will remain within a range of two strike prices
Possible signals for Silver commodity
• Following a June 18 meeting by the Federal Reserve on possible interest rate hikes, silver prices edged up to trade at $16.41 per troy ounce, 1.73% higher than the price at which the precious metal opened the market with.
• According commodity analysts, the strong performance of silver in the first and second quarter of 2015 has helped to boost the value of other precious metals. Analysts attribute this strong performance to the increasing demand in Asia and more so in China, which is the largest consumer of silver for industrial uses.
Factors Influencing Price of Silver commodity
- Demand and supply - The silver market is characterized by a tight demand and supply cycle because there are very few suppliers and the market is dominated by a handful of consumers. More than half of the world’s silver comes from China, Peru and Mexico while China, U.S., India and Japan are the major consumers. This means that instability in any of these countries can affect the demand-supply and therefore impact on prices to either bullish or bearish.
- Market value of currency - The value of the dollar has an immediate impact on the price of silver. When the dollar is low, there is an increase in the number of investors buying silver to shield against financial instability. This then causes the prices of silver to fall. A high dollar value lowers demand for silver and therefore causes a decline in the price of the precious metal.
- Gold prices - The price of silver usually reflects that of gold. A high demand for gold and a subsequent increase in gold prices triggers an increase in silver prices as well. When gold prices fall, so do silver prices.