Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, SI, Bitcoin & Ether
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There's less interest in NG than many commodities because it's a domestic commodity with little, if any, correlation with gas prices worldwide. With LNG exports about to start that may change though.
Another factor is that the heavily oversupplied NG market of the last several years is a very different market than the NG market we saw for the 10-15 years before that. For over a decade NG had the reputation of being too volatile to trade for all but the bravest. The NGH-NGJ spread was known as the widowmaker and destroyed several well known large hedge funds (Amarenth & Motherrock).
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The coined phrase "widow maker" always comes to mind when people talk about trading NG. I guess this is because of natural gas futures tendency to make quick abrupt price moves on small bits of supply/demand data. If you get it right, your a freaking hero. If you get it wrong you might be receiving a margin call from your broker. Either way if you manage your risk properly, NG can reap extensive rewards in terms of your overall equity. The mental anguish of getting it wrong is just part of game I guess.
Broker: Primary Advantage Futures. Also ED&F and Tradestation
Trading: Primarily Energy but also a little GE, SI, Bitcoin & Ether
Posts: 4,557 since Dec 2013
Thanks: 3,883 given,
9,173
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The "Widow Maker" specifically refers to the Natural Gas March-April spread and not to Natural Gas in general, but you are right at times Natural Gas can be violently volatile. So volatile in fact for many years it was considered completely inappropriate for retail and even many pro traders. With the extra supply of Natural Gas from Shale Drilling, NG fundamentals have been relatively bearish for several years now, and volatility has also been greatly depressed. One cold winter can turn that around very quickly though.
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Has anyone here ever overlapped a chart of the international shipping index futures with natural gas? I came across this on accident one day. But I found a strong directional correlation. An example of how this correlation plays out typically involves the international shipping index selling off for two days, and on the second day NG tends to follow. Or NG will go into a trending down period for a month and sure enough the international shipping index starts downtrending. I'd highly recommend checking it out. It seems more apparent in the 4hr candles.
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