CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing all your money. Read our full Risk Warning.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Trading Silver CFDs: 7 Pros & Cons to Consider

Filip Dimkovski - Writer for Fortrade
By Filip Dimkovski
Joel Taylor - Editor for Fortrade
Edited by Joel Taylor

Updated November 14, 2023.

A woman holding a tablet, looking at prices charts, with a laptop in the backround.

Among the variety of instrument classes available for trading, precious metal commodities like silver, gold, and copper have been consistently popular for many decades now. This is because they have been top-tier instruments thanks to their advantages, like their wide use cases as well as their low spreads when trading.

However, trading a precious metal like silver doesn't come without risks, so a trader needs to be aware of the cons that come with it too. Continue reading to learn about the pros and cons of trading with silver CFDs.



Advantages of Trading Silver CFDs

Trading silver is incredibly popular among both beginners and experienced investors, as the metal has to have a wide range of advantages over other instruments. Let's go over them and see what these advantages are.

1. Silver Is a “Safe Haven” Instrument

Silver has long been a “safe haven” instrument, meaning that it tends to increase in value during times of economic crisis or uncertainty. This digital instrument is also considered to be more stable than some other instruments, which makes it appealing for investors looking for less risky investments.

This is much different than the stock market, for example, where prices rapidly can change in a matter of days and weeks.

2. It Has Diverse Technological Applications

The biggest reason behind silver's popularity as a metal is its many industrial applications. It is used in a wide range of industries including electronics, healthcare, aerospace, automotive, and more. This means that silver has the potential to continue its increase in value as more technological applications are developed.

3. Silver Is Highly Liquid

Unlike small-cap stocks, for example, silver is one of the most liquid markets out there, meaning that it's easier to buy and sell silver at any given time. This makes trading with silver CFDs much easier and more convenient compared to other instrument classes.

4. It Resists Inflation

Silver is a popular choice for traders who are looking to protect their assets against inflation. In fact, silver tends to remain stable or even increase in value during times of economic volatility, making it a possibility for those looking for an instrument that will help them stay ahead of inflation.


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Drawbacks of Trading Silver CFDs

Of course, trading silver CFDs is not without flaws, as there are some downsides that come with it too. Read on to understand the drawbacks of trading silver CFDs.

1. The Silver Market Is Volatile

While silver is often seen as a “safe haven” instrument, its market can be occasionally volatile. This means that even though it has the potential to increase in value during times of economic crises, it can also drop just as quickly. As such, traders need to be aware of the risks involved and take caution when trading with silver CFDs.

2. It is Vulnerable to Technological Changes

Due to silver’s wide range of applications, it can be vulnerable to technological changes and advances. Although the chance of this happening is low, new technologies may reduce the demand for silver, which could result in a decrease in its value. Thus, traders need to keep an eye out for any technological changes that might affect the price of silver in the future.

3. Monetary Policy Changes Affect the Silver Market

Changes in monetary policy and economic conditions can also have a big impact on the price of silver. As such, traders need to stay aware of any changes in the macroeconomic landscape that could its price.



Final Words

Trading with silver CFDs is a potential way to diversify your portfolio and take advantage of its wide range of advantages. However, it’s important to keep in mind the drawbacks of trading with silver CFDs as well and make sure that you understand the risks involved. With the right knowledge and understanding, you can use silver CFDs to help you achieve your investment goals.

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