Just started trading NG 2 months ago with IB. The margin is good at around 2K intra-day as stated before. I like the price action because it moves well and not overly fast like CL can get at times. Been doing some Elliot Wave analysis with it and getting the wave counts is not as confusing as with some of the other commodity contracts. I'm liking what I've seen so far...enough so that I will continue to work with it and monitor my results. I had to take off from CL because it gets too volatile for me at times. NG is liquid enough and moves at a pace I can handle.
The following user says Thank You to mmandi for this post:
If you're trading an illiquid instrument, and big players start to unwind, will you as retail trader not suffer from erratic price movements, widening of the bid/ask spread, and more often being stopped out? That would be like August 2007, I suppose. And didn't the liquidity dried up during the Flash Crash? That could not have been a good trading day for retail traders.
So yes, for the order size of retail traders the liquidity is not very relevant. But if liquidity disappears, this affects the whole market - retail traders included.
OK we all know that retail FX brokers dont provide access to the interbank FX market (supposedly the most liquid market), but suppose you did have access to the interbank market. What happens when a central bank wants to dump some reserve currency, or some corporate, or look at the bond market, or the Eurodollar market last Friday.
All markets are going to take a bath from time to time. If liquidity falls off, then the average retail trader still hasnt got many problems compared to larger traders who may need 2 days to unwind a position.
You could argue that a less liquid contract isnt going to react as badly, simply because there is less open interest to drive it anywhere - except basis traders perhaps.
Personally, I dont agree about liquidity drying up during the flash crash. If liquidity is measured by the amount of notional willing to be put at risk in such times, then we would never have seen the S&P regain some 40-50% of the initial decline. Thats also a great arguement for HFT as well - they are the ones who brought the market back up. It would be a brave soul who could lift an offer when the markets just come off say 4% or how ever much it was in the last 10 mins!!
The following user says Thank You to TheDude for this post:
It's good to see people are starting to look at other more interesting contracts than ES and FX stuff though. Commodities will generally offer more of an edge if daytrading in my opinion - if only because 90% of traders there are either spreading, or trading off fundamentals - so there will be less competition.
It would be interesting to look at daily changes in open interest to see how many contracts are typically day traded (liquidity provision from algos) compared to those held overnight.
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Also like trading NG. To me it is either moving or not. Some days don't trade it, some days in and out all day. No problems with fills. Amp will let you trade for free with an account. $500 margins. It kinda does it own thing and really doesn't follow other markets like some will. It's slower pace works great for my style of trading.
Hi, i was going to create a NatGas Tracker. Completely agree on your assessment of the commodity. Usually the softs are my bread and butter. This forum is absolutely overwhelming. Information overload.
Last edited by zmaj; January 20th, 2016 at 02:16 AM.