Silver traders trade silver or silver-derived products, requiring a license and research skills. They use certificates, futures, and options to trade and must anticipate market movements. E-commerce is replacing open cry trading, and sponsorship is recommended for independent traders.
Silver traders participate in silver-based commodity trading, trading directly in silver or silver-derived products. This is different from being a silver dealer, someone who handles silver in over-the-counter transactions with members of the public, jewelers, and others. To work as a silver trader, you may need to have a license to trade in commodities, which requires passing an exam. Traders may also need sponsorship from a parent organization, depending on whether they want to participate in open protests on a commodity exchange or want to trade online or through computer systems.
As with other commodity traders, research is a big part of the job. Silver traders need to keep track of current prices and trends to understand market movements. They use analysis to predict price movements so they can prepare accordingly and follow policy closely as this can have an impact on raw silver prices. Some subscribe to trade publications or clipping services to help with the research, and may use wizards to help them keep pace.
These traders execute trades in very high volume. They can trade the silver itself or certificates that replace the metal. The use of certificates has several advantages as the silver can be safely stored in an appropriate facility while changes in ownership are recorded on the certificates. Derivative products, including futures and options, are also available for silver traders to use. They can be used to lock in or bet on prices for traders who use advanced analytics.
Investing in commodities like silver can be stressful. The market can move abruptly as public demand rises and falls. Metals like gold and silver are sometimes extremely volatile in response to political and social events, which can make trading more challenging. Skilled traders can profit from price rises and falls with the assistance of derivatives, but they also need to be on top of their analysis to ensure they understand current and projected market movements. A failure to anticipate events can leave a trader in an awkward position.
Open cry trading on the trading floor is in decline in many regions of the world in favor of e-commerce. In either case, silver traders often start with sponsorship from a broker or parent organization to build skills and become familiar with others active in the field. Working independently can expose silver traders to more risk because they don’t have the backing of an investment firm.
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