Traders very often trade currency pairs or stocks, but commodities are much less traded. And among commodities usually oil is the most popular. Silver and gold is much less traded. Sometimes it is unclear how and how much can news affect prices of silver and gold, so that may be reason to avoid trading them. But actually silver and gold prove to be very good choice for novice traders. Why? Read on and we will discover you more about trading metals. This Olymp Trade strategy article brings more information about silver and gold and how to trade them.
Olymp Trade Strategy – Silver (XAGUSD)
Less popular of those two is definitely silver. Perhaps this is due to the fact that not everyone knows what affects this tool – what currencies, news etc. What to expect from silver trading chart? In what direction will price will go? Many professional traders don’t know the answer to this question, not to mention new traders.
Let’s start from beginning. First, you must know that silver is measured in troy ounces. According to that on the chart in Olymp Trade trading platform you can see how many dollars buyer needs to pay for one troy ounce of silver. In essence it is commodity-currency pair: XAUGUSD (silver/dollar).
Secondly, we must understand what influences price movements of this metal? Silver, much unlike gold, doesn’t react on various rumors and therefor it usually forms relatively stable trends. This makes silver very good starting asset to trade for new traders. You just need to notice trends and trade along those trends. Trading gold is different, as “yellow” metal tends to be much more volatile.
Nevertheless, if you are thinking about trading silver you need to know some basic stuff. You need to find out whether recent report of reduced or increased production, increased demand (this is very often occurrence during economic crises), silver consumption in the industrial sector, etc. Look for these news in Olymp Trade economic calendar. When trading silver make sure you follow US news and the value of US dollar against the euro. This currency has strong effect on silver/dollar pair. If US currency is falling, then, most likely, price of Troy ounce of silver is also falling. It works the other way around: strong dollar means expensive silver. It is recommended to trade with expiry time 15-30 minutes.
Olymp Trade Strategy – Gold (XAUUSD)
Gold is, just like silver, traded in Troy ounces. In the trading platform you can observe change in price – one troy ounce of gold against US dollar. This means, like with silver, there is commodity-currency pair: XAUUSD (gold/dollar).
Gold is quite popular asset. Not as currency pairs and stocks, but more than silver. It is very dependent on the US dollar and on the news, rumors, assumptions, comments and speeches held by politicians concerning economic and political situation in America. In case the quotes of the EURUSD pair are falling (it’s best to watch time frame of 1 hour), then, most likely, gold price in dollars will go down. But this is not instant event, if dollar goes down gold price is crawling down. This metal reacts to news from US: positive data released in the economic calendar will make gold cheaper and negative information will make gold more expensive. Gold is used as store of value, so when there is recession looming, investors buy gold as mad.
Another distinctive property of this metal, with all its activity, is some sluggishness: if gold is going to go up, there will be rise in price for at least few hours. This is important to consider when trading binary options. Gold is able to pass a rather long journey in one direction in just three to four hours. All this time you can catch that trend and make more than one trade (read more about ladder trading).
Bear in mind that short deal periods are not suitable for trading this metal. It is better to buy binary options for 30 or 60 minutes, so if you choose smaller period of time, the price may not have time to pass a few points in the right direction. In any case, to support you in a difficult moments and suggest which price direction is better to open a trade in Olymp Trade will regularly publish news in their economic calendar. All registered traders have access to economic calendar and they can utilize news published there. There you can find regularly published recommendations on trade in gold.
Interesting Fact: Troy Ounces vs. Avoirdupois Ounces
Did you ever wonder why gold and silver are traded in troy ounces, when all other commodities are traded in “regular” ounces, actually they are called Avoirdupois Ounces. How is an ounce of gold different from an ounce of sugar? This has to do with history. Troy ounces probably traces its name from city Troyes in France. In medieval times they used that measure for gold and silver and it became standard since then. Troy ounces are heavier than regular ounces. So while regular ounce is 28.35 grams, troy ounce is 31.1 grams. That’s 10% difference! Difference becomes quite noticeable when trading larger quantities of precious metals.
Trading Metals – Conclusion
If you are new to online trading you should definitely consider trading silver and gold. There are certain patterns you can use to your advantage and that will make trading easier. Tracking the dollar is crucial for both metals. If dollars goes up so does the price of silver and gold, if dollars go down so does the price of both metals. Keep in mind that positive news from US makes these metals cheaper and bad news make them more expensive. Gold has great feature: it crawls behind the dollar. So if it starts going up it will go up for few hours. More than enough time to place trades.
Gold and silver may seem as great assets that are simple to trade. Truth be told they are easier that currency pairs or stocks, but still, you need to make sure you practice trading before you invest money. Best way to practice trading is to open free demo account at Olymp Trade. All you need to do is to click on the button below the text, go over to Olymp Trade web site and create account. You don’t need to deposit any money until you are ready to trade for real. If you are looking for more interesting trading strategies you can read our articles: Binary Gambit, Ladder Trading, Trading By The Hour and Trading With Moving Averages. If you are looking for more information about Olymp Trade make sure you read our comprehensive Olymp Trade broker review.