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![]() How To Trade Gold and Silver's Volatility By Chris Vermeulen August 25, 2010 Understanding the key differences between both gold and silver's risk/volatility levels plays a large part in how I choose a low risk trade setup. Those of you who follow me already know the GLD ETF is my favorite trading vehicle as it provides me with low risk trading setups along with a very high win rate. Okay, let's jump into to comparing gold and silver as trading instruments. I get the same questions from new traders all the time and I think these two questions will help clear them up. The questions are: 1. 1. Why don't you give silver (SLV) trading analysis/signals? 2. 2. Why don't you trade silver? My answer to the questions are simple and the chart below displays my view. The gold (GLD) signals I provide work with silver so you can just trade silver when I have gold long or short trade. This is the reason I don't provide much silver analysis because it's duplicate info. The chart below shows how gold and silver trade together when it comes to rallies and sell-offs. But notice how volatile silver is while gold had a nice slow and steady trend upwards. Gold's low volatility trending characteristics is what I love about it. Silver on the other hand is all over the place making it easy to have protective stops triggered before the majority of the trend is over. The silver charts almost always look terrible (tough to read for a direction). I really don't like getting shaken out of a winning trade. The pink circles show a quick short trade we did this week catching a quick 1% drop. The short trade was for FuturesTradingSignals where we capture 1-3 day extreme market sentiment shifts. ![]() GLD - Gold ETF Trading Chart The chart below shows several points as to why gold/silver was screaming BUY ME on Tuesday afternoon. The two things that carry 90% of the strength in my opinion are the candlestick pattern (Bullish Engulfing) and the volume surge. Those two things when seeing on virtually any time frame are a good indication to go long for 1-3 candlesticks minimum. ![]() Gold vs Silver - 5-Minute 3-Day Chart This chart clearly shows the power of trading a more volatile commodity with silver being the one. This week's buy signal in gold is dwarfed by the performance of silver. Silver has always shined more in my opinion but when it comes to trading. It tougher than it looks to trade because of the wild whipsaw action it makes on a regular basis. ![]() Conclusion: In short, gold is the safe haven when it comes to actively trading. I do trade silver here and there but the size of my position is much smaller because of the difficulty level and volatility associated with it. I will not that I do trade gold and silver futures at times but for this report I focused on ETFs. If you want to get my trading analysis and ETF trading alerts, join my newsletter: www.TheGoldAndOilGuy.com. TheGoldAndOilGuy.com is owned and
run by me (Chris Vermeulen), an individual gold trading specialist.
After sharing my gold analysis with friends, traders and financial
advisors, I decided to make TheGoldAndOilGuy.com my full time job in
2003. This service was designed from the ground up to help individual
traders who want to focus on consistent, accurate and profitable trades.
Over the past ten years my strategy has been refined to one golden trading
vehicle which has an almost 100% accuracy. The GLD (DGP and DZZ) gold
exchange traded funds are now the most accurate trading vehicle I have
seen, so it's my vehicle of choice. Members of TheGoldAndOilGuy.com not
only get to trade my signals, but see my live trading charts and ask me
all the questions they wish. My goal is for all of us to make money
and have fun in life.Home | Products and Prices | Buying | Selling | FAQ | Articles | Forms | Top Website © Copyright J&M Coin & Jewellery Ltd. 2010. All rights reserved. Pricing index programming and site hosting by Sandrix Technologies Ltd. (AXD) | |||||||||||||||||||