As per Georges request:

Futures 101

So the first thing you need to trade futures is a futures account. The best way I have found is a self-directed account via Interactive Brokers. There are other brokers but they don’t serve Canadians very well and they have limited access to certain markets.

If you decide to have futures access, you need to have at least $10,000 to open an account and roughly $3,000 to allocate for a trade (this is called a margin requirement). MArgin requirements are contract specific and set by the exchange. With a $3,000 draw down on your account you can buy a mini contract in pretty much anything you want in the energy, metals, grains, softs and financial futures - again the margin requirements and subsequent draw downs are contract specific. Here is a full list of contract specifications.

For the purpose of this post, the Silver contract comes regular silver contract ( Symbol:SI Exchange: NYMEX) which has a 5000 multiplier or the mini Silver (Symbol: YI Exchange: NYSELIFFE) which has a multiplier of 1000. So this means that for every $1.00 move in the contract, you will have a $5,000 or $1,000 profit or loss. The % profit and loss (PnL) can get very interesting depending on how much of a draw down you wish to incure.

Once you have chosen your idea to execute, long or short, you will need to figure out which expiry you like. For a swing trade, usually the front month contract (most active in the near term) is the way to go. However, you can trade contracts that are many months or years out. And if you are are so inclined, you could take delivery of your hard asset if your broker allows it. Here is a full list of Silver futures.

Pro: No management issues, global market open 24hrs/day, very liquid, high leverage.

Con: Volatility, no management to contact, lightly regulated, high leverage, not RRSP or TFSA elligeable.

You could also play the price of futures via ETFs – full Canadian list here. However the levered ETFs reset every day and do not necessarily reflect the price action over longer volatile periods.

If there are any questions, please contact me or continue the thread.

Cheers, J.