Need advice about silver

Discussion in 'Commodity Futures' started by lasner, May 31, 2008.

  1. lasner


    Looking to enter a silver futures contract currently have 14k in my account.

    Need advice on what my stop should be....I'm thinking maybe $750.

    Want to buy silver any good suggestions on how to enter futures contracts while stilll protecting yourself on a 14k account
  2. ess1096


    Your stop should be below where YOU perceive support.
  3. here is an idea for you

    buy only one mini YI contract and hedge with the sale of say 25-50 shares of SLV while you ease into the idea of trading such a volatile instrument or

    or even consider selling a silver mining stock that tracks the price of silver like SLW

    or instead of silver mini try the gold mini YG one contract
    and hedge with say one hundred or so shares of GLD while
    getting comfortable with the gyrations of the metals

    ps ... do not use a stop in YI without a limit in YI

    this past week in thin overnight trade YI got clobbered
    for no reason relative to the full size ZI and SI contracts
  4. Magna

    Magna Administrator

    Assuming that the balance of the 14k in your account after your purchase will not be used for other trading (that is, it's dedicated to maintaining margin levels against your silver futures contracts) then a very useful approach is to calculate what your margin liquidation figure would be for various sizes and then make your determination based on that. For instance, if you are trading thru IB they require $1,500 per YI on the eCBOT (other brokerages may have different margin figures). Using that margin number along with an initial 14k account and the closing price on Friday, if you bought:

    1000 oz (1 YI) your margin liquidation would be about 4.37
    2000 oz (2 YI) your margin liquidation would be about 11.37
    3000 oz (3 YI) your margin liquidation would be about 13.70
    4000 oz (4 YI) your margin liquidation would be about 14.87

    Obviously 4 YI would be too risky as it's very possible the price could go down to that figure wiping out your account. 3 YI is a little safer but still very risky as that price could also be hit on a whoosh down (anyone who trades silver knows those yee-haws do happen, even moreso in the YI). 2 YI provides a few dollars more comfort zone, and if you don't think price has a realistic shot of getting to 11.37 that might be the size to consider to get the most bang for your buck. 1 YI for practical terms should be about as safe as safe could be (outside of a hedge as SethArb described) since that would require a 74% drop from current depressed levels which is beyond unlikely as we are still in a silver bull market. Hope that helps.
  5. silver is a brutal market to trade whipsaws all around. trade mini silver at first. that 750 will be gone quick if you trade the big one
  6. ess1096


    I agree.
    Even the mini, with a current ATR of .61 cents, only needs a .75 cent move to take your $750 stop out.

  7. seth is very knowlegable about the metals listen to him.

    Does anybody else wish Realist would come back??
  8. GLD is suppose to trade options any day now

    maybe SLV will also someday have options that you can hedge with..

    silver is a tough market to make it in...

    it is tiny and thin and gets pushed around by guess who...

    you may take a crack at GC (mini) first.

    if you trade with scared money, you're doomed.
  9. I agree ... silver can be as whippy as any of the energy

    sheesh ... why in blazes is the gold silver ratio approaching 53 ?
    when silver is supposed to be scarcer to find via the dealers than gold ( confused pm trader below )

  10. what is the ratio historically supposed to be at?
    #10     Jun 2, 2008