A Simple Way to Trade Silver

| October 15, 2019

Image by Unsplash

Is there a simple way to understand silver?

Yes indeed, silver analysts – including your friendly Gold Enthusiast – do sometimes prattle on about this and that factor, and how the silver markets are paying attention to this right now, that a bit later.

What if you just wanted a really simple way to trade silver?

We’d recommend starting with good ol’ whole-dollar price levels. Yes, traders and investors still react to those, pretty strongly if simple price charts are any indication. Take this chart of the New York daily closing price of silver for the last 6 months.


(credit Kitco.com)

Pretty simple right? The point that really jumps out of this chart is how silver seems to hang around, jump off, or dive through whole-dollar price levels. (In trading we talk points, in this case, a point is a US Dollar.)

This is where the most simple trading method comes from.  Swing trading is when you buy something when it rises above a price level, and sell when it drops below a price level, usually over a period of weeks or months.

The space in between levels is called “no-man’s land” because no sane man would start a new trade here – you don’t know whether it’s going up or down in between.

Right now, for example, we can see silver’s latest “move” was bouncing off 17, and now we’re waiting to see if it gets to 18. If it doesn’t get to 18 – well, then it would be time to short silver if it drops below 17.

These whole-dollar levels are called psychological levels for good reason. People get confused when talking about single cents, and price in cents fluctuates almost by the second. But dollar levels tend to be more stable, with enough time in between to think and consider and plan.

It seems simple enough. As a place to start, it’s pretty good. But it takes a bit more refinement and some allowances to make sure you’re not driving yourself nuts trading in-out-in-out during those times it’s fluctuating around a level. That’s a discussion for another day…


The Gold Enthusiast

DISCLAIMER: No specific security was mentioned in this article.  The author is long the silver sector via small positions in USLV, PAAS and SVBL. He may day trade around these positions but has no intentions of trading out of these core positions in the next 48 hours.

Note: This article originally appeared at The Gold Enthusiast on October 10, 2019.


Tags: , , , ,

Category: Silver

About the Author ()

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals. Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach. Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"