Investing In Silver For the Long Term

Many people are aware that silver is one of the most in demand precious metals in the world. Silver is a very common precious metal that is used to make jewelry, utensils, computers, vehicles, industrial metals and so on. It is one of the commonly traded precious metals in the commodity market, like gold. It has given many of the enthusiastic investors good returns for their investment in the commodity market. Silver is a very safe precious metal to trade with unlike foreign exchange or other areas in trading.

Lower Risk Factor

Silver has lower risk factors when compared to many other commodities as well as stocks, and shares. The risk in trading sliver is very low when compared to bonds or ETFs. If you are looking to invest in the market for long term, then there is no better commodity that you can think of than silver. It is not similar to any stock trading business but, is more or less similar to gold, which always has a value in it.

Accumulating Silver

One of the best ways to gain good profits out of silver trading is to consider it as a long term investment option. Silver is highly volatile like gold and if you are knowledgeable about making the right moves in silver trading at the apt times, you will end up pocketing good amounts of profit. You should always invest in silver with a long term bullish attitude. Accumulating silver at regular intervals will help in increasing your wealth insurance as well as can be a good trading instrument.

Invest In Physical Silver

One of the best ways of making better investments is to buy silver in its physical form. It not only adds on to your wealth over the years, but you will also be experiencing a steady increase in the price of the silver. There is no dearth for availability of physical silver as you can get it in the form of mint coins that are minted by mining companies, or even can get it in the form of fine bullion that is produced by the national governments.

Silver Bullion

One of the best ways and the traditional way of investing in silver to enjoy long term benefits, is to go for silver bullion. You can opt to buy silver bars which are rectangular metal pieces that come in different sizes ranging from 1 troy ounce bars to 1000 troy ounce bars. You can store these silver bars in your home or even better, in your bank lockers. You can sell all of it or trade in limited quantities whenever you feel that the price of silver is at its peak. Silver is easier to buy than the gold bars, and is also a much cheap investment option with huge returns, very similar gold.

Small Investments

One of the main advantages that you will get by investing in silver is that it just attracts small funds. This small investment can lead to huge profits after many years. With just about $10,000 you can buy huge quantities of silver. You will be able to increase your assets and wealth by investing in physical silver. It is a good buffer that you can always rely on whenever there is an economic crisis, you may need greater financial support in times of financial disasters.

Keep Tab Of Gold Rates

Silver and gold always go hand in hand and hence you need to keep a tab on the rates of gold every time when you have invested in silver. They both normally trade in harmony and whenever gold prices sky rocket or is increase, the prices of the silver will also be seeing an upward trend, and vice versa. But, the fact is that silver is available in more quantities than gold. There is almost 16 times more silver than gold in the world, and this is the reason why demand for gold is in excess of its supply.

Invest During Inflation

One of the top most methods that you can think of to invest in silver is when there is inflation. If there is a few issues related to the stability of the financial market, then gold and silver would more often than not be the main hedge against inflation. Many people will try to look at various other options when the gold prices are soaring, and the next best option of investment is surely silver. This precious metal is chosen by many because of its huge affordability. These type of chances do not come often and when you encounter such a chance, it is important for you take advantage of this and enjoy a good return on investment. This is the reason why you need to think of buying silver as a long term goal.

Advantages Of Investing In Silver

The following are the advantages that you can enjoy when you are investing in silver.

The demand for silver is always there until silver is used for industrial purposes. The demand for silver does not depend upon the economic condition that much. As there is constant demand for silver, its prices will keep on increasing and hence is a very good source of investment option if you are looking for long term returns.
Silver is known as ‘poor man’s gold’. It is highly affordability when compared to gold or other precious metals and it also offers better returns.
As silver is traded in different forms all over the world, it has high liquidity. Silver, in fact, was used as a currency in many parts of the world earlier.
You can also invest in silver in various forms like: silver bars, bullion coins, jewelry, junk silver, scrap silver, collector’s coins as well as silver rounds.

Overheated Heating Oil Market

I was fortunate enough to be interviewed for a Wall Street Journal heating oil story last week. The primary question was, “How high can prices soar?” Supplies have tightened up considerably during Mother Nature’s onslaught and another bout of cold weather is hitting us, pushing prices higher yet again. Short-term demand related issues like the ones we’re experiencing now due to the weather are never a reason to jump into a market. My less than sensational outlook on current prices pushed me to the closing section of the article. This week, I’ll expand on the topic by looking at the diesel and heating oil markets and formulating a trading plan for the current setup.

I’ll work from big picture to fine detail in order to provide some context for the current situation. First of all, the fracking boom has fundamentally altered the energy landscape of the United States. We are quickly moving from net consumer towards becoming a net producer in the oil and natural gas markets. This paradigm shift is leading to an energy market structure that places us on the side of selling price spikes that are demand based. In this instance, bad weather has created a temporary increase in heating oil use. The price spike will not hold because we have the capacity to rebuild domestic energy stocks cheaply and rapidly.

The same bout of weather is responsible for driving heating oil costs to record levels in the Northeast where more than 80% of all heating oil is consumed. The flip side is that this same weather pattern is keeping people indoors. People staying inside only create heating oil demand. People in normal conditions add to diesel demand through their purchases of goods and services while they’re out and about spending money. Therefore, the net balance of the broader term market shifts towards a bearish supply issue as diesel fueled trucks have less to deliver and fewer miles to cover as citizens remain toasty and warm in their homes instead of out shopping and eating.

The domestic energy market can control supply but has little control over demand except at extremely high prices. Energy production costs are fairly fixed. The primary variable in an energy producer’s arsenal is capping low yielding wells. Prices as a trend however are falling in general as the current processes become more efficient in their cost of execution. Therefore, over time, energy prices should generally decline. Furthermore, energy producers in times of price spikes will sell as much of their expected forward production as possible at these higher prices. This allows energy producers to slow down price spikes through their implementation of profitable short hedges at unsustainable current market prices.

The best way to view these actions is by comparing spread prices to Commitment of Traders data. Spread prices allow you to compare the current market price against a forward price. Current prices or the cash, “spot” markets are the most volatile as they are the most susceptible to short-term supply and demand disruptions. Forward prices are more predictable due the amount of time left to factor in risk variables. Typically, these risk variables include physical storage, insurance costs and interest rates. This leads to forward contracts being priced structurally higher the farther out one looks. This is normal market behavior and the gradually elevated price along the timeline is called, “contango.” Conversely, in times of drama the spot price can overshoot the prices of the deferred contracts. This situation is called, “backwardation.” Backwardation is the market’s incentive to get producers to sell the physical product at the currently elevated price.

Drilling into the details, (pun intended) we can see that there’s definitely a premium in the delivery month futures contract. Knowing that this pricing structure is temporary along with the weather I’m going to let this entire rally pass. There are two reasons I think there’s a better place to buy. First of all, the heating oil market is nearing solid resistance on the daily, weekly and monthly charts. Secondly, I expect the demand numbers along with the general economic numbers for the next month to be dismal. This will lead to a selloff and drop the market under $3 per gallon. I expect the market to be supported around there and provide a solid bottom to buy into the spring driving rally. Don’t let the hype suck you in.

This material has been prepared by a sales or trading employee or agent of Commodity & Derivative Advisors and is, or is in the nature of, a solicitation. This material is not a research report prepared by Commodity & Derivative Advisors’ Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Best Types of Algorithmic Trading Systems

Investors are constantly on the lookout for new investment strategies that take the guesswork out of an investment. They want it to be a high-yielding, low stress approach; one that minimizes risks and maximizes profits on every deal. Algorithmic trading systems were developed along these lines. “Algorithmic” sounds like a heavy term to digest, but it is not. We will give you a brief overview of algorithmic trading and its varied types.

What is an Algorithmic Trading System?

The term automated trading is used interchangeably for Algorithmic trading. However, the two are different concepts. The latter is a subset of the former. Algorithmic trading is defined as the use of advanced mathematical tools to make important transactional decisions in the financial market. This system relies heavily on computer models to make trades. Based on the prevailing market conditions it decides whether to buy, hold or sell a position.

It splits a large trade into multiple orders in order to reduce market impact.

Algo-trading is generally used by large institutional investors. Many hedge funds and banks have built their own algorithmic trading systems. These systems are complex and they vary from one broker to another. It is also known by some as black box trading and algo-trading. There are many Algorithmic Trading Systems for individual traders and investors available online.

The algorithmic systems have several advantages to an investor. It involves minimum human intervention. It is technology driven and hence offers a higher level of accuracy. It is automated and capitalizes on every possible opportunity that arises in the market. It is prompt and spots high probability opportunities even before a trader couple ever spot and reaction to a setup. It has greater benefits for large institutions because they deal in a large amount of volume each day which requires accumulation and distribution to avoid moving the market bid and ask price.

There is another term that is very popular on Wall Street. It is High-Frequency trading. High-frequency trading is a subset of algorithmic trading. It is used to refer to short term trades. It is an electronic platform that trades large volumes at very high speeds.

Types of Algorithmic Strategies

Algorithmic trading systems are categorized into different types based on the functions they perform. Listed below are the major types.

1. Trade Executions Algorithms:

This strategy is applied to minimize price impact when executing trades. It breaks up trades of large volumes into smaller orders and releases them slowly into the market.

2. Strategy Implementation Algorithms:

This strategy reads and relays on real-time market information. It formulates automated trading signals to be implemented by a trade execution platform. It also involves rebalancing portfolios and searching for arbitrage opportunities.

3. Gaming and Stealth Algorithms:

It is specially created to take advantage of price fluctuations arising out of large trades.

4. Electronic Market Making:

It is also known as passive rebate arbitrage. This liquidity-providing strategy imitates the role of traditional market makers.

5. Statistical Arbitrage:

This is a quantitative approach to equity trading. It developed out of the simpler “pairs trade strategy”. Unlike the pairs trade strategy that compares and contrasts a pair of investments, Statistical Arbitrage tries to correlate hundreds or more stocks including long and short ones.