How to Trade Silver Futures: Costs and Different Brokers
You can trade futures by opening a trading account with a trusted broker who handles futures trading. CME Globex, CME Clear Port, AmeriTrade and Etrade are some well known online platforms for trading futures.
Most brokerages will charge the National Futures Association fees, which is roughly around $0.02 per side, along with a commission (which can range from $0.025 to $3 and more, per contract per side). You will also have to pay an exchange fee, which will vary depending on the exchange and the specific contract you are trading. Be sure to look at the fine print and add up all the fees into your cost.
Silver Futures Contracts
Silver is sold under the symbol “SI” on the New York Mercantile Exchange (NYMEX) through its Commodity Exchange (COMEX) open outcry method, or electronically through the Chicago Board of Trade (eCBOT). Each contract is for 5,000 troy ounces, and the contract is deliverable in Jan, March, May, July, September and December. The contract is quoted in cents per troy ounces,
Silver futures also trade internationally on the Indian National Commodity and Derivative Exchange (NCDEX), Multi Commodity Exchange (MCX) and Tokyo Commodity Exchange (TOCOM).
Price movements in the silver futures market carry both risks and opportunities.
Silver futures are affected by the fact that silver is extracted from an ore of copper, gold and zinc. Copper is responsible for 25% of the silver mined in the world, but copper’s demand is controlled by the home construction sector. Any changes in demand in that sector will indirectly affect the price of silver and silver futures.
Silver’s demand also depends on industries like electronics, solar electricity and photography. Any changes in these industries will affect silver futures prices.
Silver prices rise and fall in somewhat tandem with gold prices, so silver futures are dependent on the price of gold.
There are also the risks typical to financial trading. Silver futures have a lot of leverage, which allows traders to control a large amount of commodities for a small amount of investment. However, it also means that even a small, unfavorable change in the prices of silver can drastically impact a traders’ entire equity.
Trading silver futures requires a delicate balance, but traders who can minimize their risks, stand to gain much from this market.