Silver Forex Trading Examples

Assume that an investor opens a forex account by depositing $50,000.

Let’s assume that the current spot price of silver is $30 per ounce, and the investor expects a downward movement in silver prices. In this case, the investor’s position direction will be SHORT.

The investor will take the following position:

1 LOT = 5,000 ounces × $30 = $150,000 position size.

For this transaction, 10% of the position size will be used as margin from the account balance.

Initial Margin = $150,000 / 10 = $15,000
(An amount of $15,000 will be reserved from the account as margin to open the position.)

In summary, the investor has opened a short position with a position size of 1 LOT = 5,000 ounces = $150,000.

If the silver price falls to $29.00, what will be the profit or loss on the investor’s account?

1 LOT = 5,000 ounces = $145,000 position size, therefore:
Position value difference: $150,000 - $145,000 = $5,000 profit will be reflected in the investor’s account.

This means that for silver, a $1 movement per 1 lot corresponds to $5,000.

If the investor had executed the same transaction with 0.10 LOT, the following situation would occur:

0.10 LOT = 500 ounces × $30 = $15,000 position size.

For this transaction, 10% of the position size will be used as margin from the account balance.

Initial Margin = $15,000 / 10 = $1,500
(An amount of $1,500 will be reserved from the account as margin to open the position.)

If the silver price falls to $29.00, what will be the profit or loss on the investor’s account?

0.10 LOT = 500 ounces = $14,500 position size, therefore:
Position value difference: $15,000 - $14,500 = $500 profit will be reflected in the investor’s account.

This means that for silver, a $1 movement per 0.1 lot corresponds to $500.