What are silver futures contracts and its advantages ?

Posted by epicresearchindore on June 30th, 2017

Precious metals like gold, silver are used for several purpose from years and considered as important of part of investment portfolio as well. After gold, silver is the most actively traded commodity on mcx as it is a practical and smart investment option.Silver futures are standardized contracts traded over different commodity exchange where two parties: buyer and seller agrees to buy and sell a specific quantity of silver at pre decided price on a future date. Mcx Tips on silver, gold and other metals are helpful in earning expected returns from commodity market.Silver futures gives a good way to invest in this soft metal and large number of people are attracted towards it now a days.

Silver is a shiny metallic metal which is very ductile and malleable.Among all the metals it has highest thermal and electrical conductivity.This metal is popularly used in electronics and photography.Consumers and producers often worry about future price changes. They can successfully hedge against this risk by purchasing and selling silver futures.Producers can take short position in market thereby locking their selling price and business that require silver can take long position and lock their purchase price. Along with traders , speculators also exists here. They buy silver futures when they believe price will rise and conversely sell when they believe price will fall.

Advantages of trading in silver futures contract :

1)Buyer of the commodity need not to worry about storage facility immediately as he will be taking the physical possession on future date.

2)After the agreement is signed that on a particular date a trader has to buy specific amount of commodity at decided price he gets time for making arrangement of final payment.

3)Trading in silver futures is beneficial as this commodity offers good liquidity.

4)It is not difficult to find buyer here which make trading in this metal less risky.

Trading in silver futures is not risk free ,risk associated with this contract are discussed below :

1)With each such trade default risk is there.If buyer or seller is unable to fulfill obligations made by him then the other party involved is in risk and may face loss.

2)Market is of highly volatile nature. Commodities like silver becomes more volatile when market crashes.

3)During the period of trade i.e when trader has entered in to the contract, silver prices may fluctuate. Investors tends to loose some portion of investment at such times.

These are few important facts related to trading in futures contracts of silver. They are dated contracts and have an expiry date. Before taking a position in future market an investor should make a note of this point. Trade results can be improved by using mcx tips on silver, currency tips and more experts suggestions. Along with this a wise trading strategy is equally helpful. Learn about market updates timely and understand which strategy is going to give best result.