How to Trade Silver (XAGUSD): Volatility, Sizing and Rules

Real interest rates and the dollar set the baseline: a stronger dollar or higher real yields typically weigh on silver, and the reverse supports it. Because silver is priced in dollars, some of every move is just the dollar.

On top of that sits industrial demand — roughly half of consumption — from electronics, solar and manufacturing. That is why silver can rally in a growth-optimistic market where gold stalls, and fall harder in a slowdown.

Spot silver is normally quoted per troy ounce with a standard contract of 5,000 ounces, so a one-cent move in price is about $50 on a single standard contract. Check the contract specification for your account before sizing anything.

Combine that with silver's daily range and the arithmetic gets serious quickly: a stop that is a reasonable distance in market terms can be a large dollar risk. Always convert the stop distance into dollars, then into a percentage of your drawdown allowance, before entering.

On a $50,000 evaluation with 8% maximum drawdown, the entire allowance is $4,000 and the daily limit at 3% is $1,500. Risking 0.5% per trade means $250 per idea, which on silver often means a fraction of a standard contract.

Two habits protect the account: size from the stop rather than from the position you would like, and treat silver as a smaller allocation than gold for the same conviction. Drawdown here is measured on equity, so an open loser counts against the floor in real time.

Liquidity is best across the London and New York sessions; spreads widen noticeably outside them and around the daily rollover. Silver also gaps over the weekend more readily than the major currency pairs.

Weekend and overnight holds are permitted here, and swap applies to multi-day positions. If you intend to hold through a weekend, size for the gap you cannot manage rather than the stop you can.