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Trading NG (natural gas)


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Trading NG (natural gas)

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  #1 (permalink)
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Does anyone here trade natural gas?

Just wondering what you need to look for when trading this?

thanks

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  #3 (permalink)
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tellytub View Post
Does anyone here trade natural gas?

Just wondering what you need to look for when trading this?

thanks

Use to do it long ago.

You need volatility, liquidity, and volume. None of that real good for day trading. Good for physical trader.

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  #4 (permalink)
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ETF swing trade only. Currently flat.

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I just saw this for NG:


1. $3 per mmBtu ($30,000 per contract) for all months.

2. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $3 per mmBtu in either direction.

3) If another halt were triggered, the market would continue to be expanded by $3 per mmBtu in either direction after each successive five-minute trading halt.

4) There will be no maximum price fluctuation limits during any one trading session.




What on earth does this mean? Is this like something really bad? Is this something you have to think about when trading NG?

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Nothing to me unfortunately. I've stopped watching news. It's only what price does when institutions start processing the news that is of any interest to me. What exchanges do is even of less interest.

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@tellytub

Did or do you trading "Natural Gas" NG at Nymex? My strategy shows excellent results at this instrument. I'm a little afraid to commodities with a physical settlement type. But i think if you close your trades at the right time, then it's a non-issue. But you should look at your trading calender often. Any other advices?

Koepisch

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Koepisch View Post
@tellytub

Did or do you trading "Natural Gas" NG at Nymex? My strategy shows excellent results at this instrument. I'm a little afraid to commodities with a physical settlement type. But i think if you close your trades at the right time, then it's a non-issue. But you should look at your trading calender often. Any other advices?

Koepisch

Hi Koepisch

No I have not traded NG, been really busy at work. I still look at NG now and again, but just too busy at work to trade.

Sorry

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  #9 (permalink)
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I find NG an excellent instrument to trade the closing hour, 1:30 to 2:30 PM EST. It tends to trend well, and can usually move 50 ticks. On the other hand, it's less volatile and more predictable than CL. As long as you day trade, there's not much to worry about.

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  #10 (permalink)
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tellytub View Post
I just saw this for NG:


1. $3 per mmBtu ($30,000 per contract) for all months.

2. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $3 per mmBtu in either direction.

3) If another halt were triggered, the market would continue to be expanded by $3 per mmBtu in either direction after each successive five-minute trading halt.

4) There will be no maximum price fluctuation limits during any one trading session.




What on earth does this mean? Is this like something really bad? Is this something you have to think about when trading NG?

This isn't something one should worry about. I believe all commodity contracts have these specifications. All it means is that trading will be halted if there is a wild swing of at least $3 dollars during any given trading session...which is highly unlikely to happen.

I trade primarily NG but also take trades in TF and CL...I like Natural Gas because it has a lot of really nice trending sessions. NG has been governed by bear sentiment for the past four years.

Generally speaking, Gas rallies during winter months when demand in the North East is high and inventory is declining. Natural Gas is also very sensitive to news, especially IEA Natural Gas Inventory which comes out every Thursday at 10:30 ET. I have watched the price swing by over a point in a 3-5 minute interval when the inventory numbers come out.

I also keep a close eye on the National Weather Service ..specifically weekly forecasts for the North East during cold months and forecasts for the Gulf region during summer/fall. Hurricanes can damage shale gas fields in the Gulf and infrastructure that delivers NG for distribution to the Henry Hub in Louisiana.

Severe weather, like inventory numbers gets priced in swiftly and ruthlessly.

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0bl1vion View Post
This isn't something one should worry about. I believe all commodity contracts have these specifications. All it means is that trading will be halted if there is a wild swing of at least $3 dollars during any given trading session...which is highly unlikely to happen.

I trade primarily NG but also take trades in TF and CL...I like Natural Gas because it has a lot of really nice trending sessions. NG has been governed by bear sentiment for the past four years.

Generally speaking, Gas rallies during winter months when demand in the North East is high and inventory is declining. Natural Gas is also very sensitive to news, especially IEA Natural Gas Inventory which comes out every Thursday at 10:30 ET. I have watched the price swing by over a point in a 3-5 minute interval when the inventory numbers come out.

I also keep a close eye on the National Weather Service ..specifically weekly forecasts for the North East during cold months and forecasts for the Gulf region during summer/fall. Hurricanes can damage shale gas fields in the Gulf and infrastructure that delivers NG for distribution to the Henry Hub in Louisiana.

Severe weather, like inventory numbers gets priced in swiftly and ruthlessly.

Thanks 0bl1vion, that was so useful!! really kind of you to share this with us.

Take care

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Koepisch View Post
@tellytub

Did or do you trading "Natural Gas" NG at Nymex? My strategy shows excellent results at this instrument. I'm a little afraid to commodities with a physical settlement type. But i think if you close your trades at the right time, then it's a non-issue. But you should look at your trading calender often. Any other advices?

Koepisch

Physical settlement is OK. In the worst case scenario, you get a notice that you have 10,000 mmBtu of natural gas held at an oil depot in Louisiana in your name, and an invoice for storage costs. If you messed up, you can still break the contract at a price. And if you forgot about it altogether, they will still eventually sell the natural gas to repay you less the storage costs.

Difficult part is if you *really* want to take delivery.

The first thing I'd watch out about is that it is tempting to associate the natural gas market with the crude oil market, as you would imagine fundamental relationships exist between them. However, the economic drivers of both markets are very different, because the US consumption is completely met by North American production. If you are using any crude oil-based indicators as an exogenous factor in your trading models, then you could be finding completely spurious relationships.

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