Precious metal trading is relatively safe compared to trading stocks and indices. Thousands of traders in the United Kingdom are making millions by using precious metal as their trading instrument. They are not taking any trades in currencies or other forms of trading. But if you dig deep, you still find many people who are losing money trading precious metals. After doing extensive research, you will find many root causes of such losses. But it is hard to eliminate the problems when you have a long list of them.
To help retail traders, we are going to concentrate on the silver market. We will discuss some of the common reasons why people lose money in silver trading. By avoiding these problems, you can improve your win rate by more than 20%. So, read this article if you want to be good at precious metal trading.
Trying to ride a new trend
The price correction in silver is a bigger than with gold and other trading instruments. By using the Fibonacci retracement tool, you will notice the corrective movement in the price frequently extends to the 61.8% Fibonacci retracement level. But the amateur traders consider this deep correction in the price as a reversal. They end up taking trades in favor of the correction when the market is about to move in the direction of the trend.
Stop trying to trade a new trend. Learn the use of the Fibonacci tools as it will help you to analyze the key point in the market. Being a CFD trader, you have a lot to learn about this market. The new traders don’t have the skills to analyze the key tools in the trading platform. So, analyze the key tools in the trading platform and learn to stick to the trend.
Choosing an unregulated broker
Choosing an unregulated broker is one of the main causes of losing money at the CFD trading business. You need to gain access to the high-end platform that can deal with the fast-paced trading environment. If you trade with a low-end platform, a significant delay in the price feed will result in loss. Most importantly, you will fail to analyze the key metrics with a high level of precision. Brokers like Saxo know this and they have designed a well-balanced platform for pro traders. The best thing about Saxo is the low deposit requirement for newcomers. So, they choose a good broker while trading the silver market.
Knowing too little about the economic events
Technical analysis is not going to work 100% of the time. To become a skilled trader, you must know about the news factors. The new traders have almost zero knowledge about the economic factors that can affect the silver market. So, when things go crazy they blame the market. But the pro makes big profits in such a crazy market. You should be analyzing the market data from the starting of your career. Learning to deal with the major news is not that tough, but if you manage to deal with the complicated variables of the market, you will be able to make a decent profit without having any trouble.
Get excited with the trade setup
The silver market is also known for printing the golden trade setup. If you choose the higher time frame and use a reliable price action signal, you might notice a very rare but golden trade setup. For instance, you might have a bullish cross in the EMA and strong rejection at the 61.8% retracement level. Several other indicators might confirm the bullish momentum. You see such a trade setup and execute a long order with a big lot. Suddenly, the market drops due to a major announcement. So, you never know the result of the trade. Stop getting excited by seeing the trade setup and try to stay calm.