Many traders regard gold and silver as the same type of assets and use the same set of cost expectations. In fact, the two varieties are different in spread structure, fluctuation characteristics, and overnight rules, and the cost accounts are completely different. This article breaks down the differences in gold and silver transaction costs and helps you reasonably allocate cost expectations between the two varieties.

Spread: Silver “points” versus gold “price”

Spreads are usually measured in "points", but the price base of gold and silver is different, and the same number of points corresponds to completely different cost ratios. When the price of gold is high, the spread ratio is relatively small; when the price of silver is low, the same number of points accounts for a higher proportion of the price, and the cost ratio is more obvious. When comparing, you can't just look at the number of points. You have to convert it into a "percentage of the price" or the actual amount per lot to be comparable. For example, the spread of the same point has a significant difference in the proportion of the price of gold and silver. Traders can regularly use the latest quotation to convert it once to form their own reference value.

Fluctuation Characteristics: Silver’s Amplitude and Cost Ratio

Silver prices are low and fluctuate relatively much, with single-day fluctuations often significantly exceeding those of gold. Large fluctuations bring two cost impacts: First, the probability and magnitude of slippage are higher, and the transaction price deviation is more obvious when the market is fast; second, with the same stop loss distance, the absolute fluctuation of silver prices is greater, and the proportion of costs in the price is more likely to be amplified. When trading silver, keep a wider budget for costs. In addition, gold and silver tend to fluctuate in the same direction during data market periods, but silver's jump amplitude is usually larger, and slippage management is correspondingly more difficult.

Overnight and contract specifications: check separately by type

The contract specifications of gold and silver (the weight represented by each lot) are different, and the calculation basis of overnight interest is also different. The overnight figures of gold cannot be applied to silver. Traders who hold gold and silver at the same time in the long term should check the overnight rules and collection days separately by type and keep separate accounts.

Capital Occupation and Leverage: The “Light” and “Heavy” of Silver

The price of silver is low, and the margin required for a single lot is usually smaller than that of gold, which seems to have a "low threshold"; however, silver is highly volatile, and the actual risk with the same funds is not small, so the use of leverage must be more cautious. The same is true from the cost perspective: silver has a high proportion of handling costs. If you trade silver with small positions and high frequency, costs may accumulate faster than imagined.

Use variety differences to guide trading choices

After understanding the cost difference between gold and silver, you can guide your choice in the opposite direction: if you prefer a low spread ratio, gold is more suitable; if you have a small amount of capital and want to try it out at a low cost, the cost per hand of silver is low but the proportion is high, so you need to calculate it carefully before making a decision; if you trade two varieties at the same time, establish two sets of cost expectations and manage them separately. Once cost expectations are established, they should be reviewed regularly because spreads and overnight rules may be adjusted according to market conditions.

Take WMAX as an example: Calculate costs by category

Putting the cost difference of gold and silver on the platform, WMAX separately publishes the contract specifications, spreads and overnight interest information of gold, silver and other varieties. Traders can calculate it one by one instead of sharing a set of numbers. The demo account is also suitable for running gold and silver transactions separately to observe the difference in cost ratio of the two varieties under the same strategy. It should be noted that the specific values ​​are subject to the latest announcement of the platform, and traders should establish the habit of "accounting by category". Whether WMAX is right for you depends on how well you understand the cost structures of both varieties.

write at the end

Gold and silver are both precious metals, but their cost accounts are calculated separately: different proportions of spreads, different fluctuation amplification costs, and different contract and overnight rules. By constructing and managing the cost expectations of the two types separately, transaction selection can be more realistic. Regardless of whether you choose WMAX or other platforms, it is recommended to calculate costs separately by category and always control risks within a tolerable range. Leveraged trading carries high risks. Please fully understand the relevant rules before entering the market and make prudent decisions.