CME silver futures (SI) give active traders a vast array of strategic options. No matter whether your horizon is intraday, day, or swing, buying and selling SI contracts can be lucrative. If you’re a metals trader, then the CME’s full-sized, E-mini, and E-micro silver contracts are certainly worth a look.
For those with a technical bent, being able to build a robust silver futures price chart is the key to generating consistent profitability. Read on to learn the three tips that can help you become a competent silver chartist in no time.
Tip No. 1: Choose the Right Periodicity
When constructing a price chart, one of the first things that you should address is periodicity. Periodicity refers to the durations or intervals by which pricing data is sorted. It may be defined in many ways, including volume, ticks, or time. For a vast number of traders, time is the preferred mode of periodicity.
Periodicity is critical to a chart’s utility because it’s the foundation on which all technical studies, indicators, and tools are applied. Thus, your silver futures price chart must have a periodicity that complements your trading strategy.
To illustrate this point, assume that you’re a silver scalper. According to this strategy, you aspire to execute a high volume of positive-expectation trades each day, all with tight profit targets and stop losses. Given this approach, daily, weekly, and monthly charts are going to be of limited use; the extended durations illustrate broad price movements and produce limited trade setups. Conversely, suitable periodicities for scalping are smaller tick and volume intervals, as well as one-minute, five-minute, 30-minute, and 60-minute charts.
Here are a few general periodicity guidelines for various trading strategies:
|Minimal volume and tick counts: 1- through 60-minute intervals
|Extended volume and tick counts: 30-, 60-, 90-, 120-, 240-minute, daily, weekly
|Daily, weekly, monthly
|Weekly, monthly, yearly
Tip No. 2: Don’t Overlook Multiple Time Frame Analysis
In the silver markets, an important aspect of trading competently is thoroughly understanding market behavior. Although trading from a chart with an ideal periodicity is crucial to success, being in tune with the broader market is also essential. You can accomplish this via multiple time frame analysis.
When referenced in isolation, a silver futures price chart provides a one-dimensional view of the market. However, when studied alongside charts of varying durations, it becomes possible to place evolving price action into a useful context. By pursuing this approach, you gain the ability to recognize prevailing trends and noteworthy technical levels, as well as to fine-tune market entry and exit points.
To illustrate the utility of multiple time frame analysis, assume that you’re a silver day trader. The chart periodicities most useful to this strategy are weekly, daily, and intraday. Under multiple time frame analysis, here’s how you would use these charts:
- Weekly and daily: These durations help to identify macro pricing trends and key long-term technical levels.
- Intraday: Tick and minute periodicities provide an in-depth look at current price action. These charts furnish the user with precision regarding the definition of market entry and exit points.
Remember, a powerful silver futures price chart is one that provides useful information! With multiple time frame analysis, you can boost chart efficacy regardless of your strategy.
Tip No. 3: Avoid Indicator Overload
One of the biggest mistakes that new market technicians make is that they try to do too much. Although adding more than one technical tool to your silver charts is a good idea, it is possible to quickly reach indicator overload. Implementing too many technicals often leads to conflict, confusion, and, eventually, analysis paralysis.
To avoid the perils of analysis paralysis, start slow. A good rule of thumb is to apply no more than two indicators to your silver futures price chart until you become fluent with the approach. After some time has passed, it may be worth considering adding more technical tools to your charts.
Are You Ready to Build Your Own Silver Futures Price Chart?
If the CME’s full-sized, E-mini, and E-micro silver contracts pique your interest, you’re not alone. These products attract thousands of participants daily. However, before jumping into the silver markets with both feet, it’s a good idea to know the basics.
To learn the ins and outs of technical trading, check out our free e-book 10 Rules for Technical Future Trading. Download it today to learn how to think like a technical trader, recognize chart formations, and take action when it’s right.