Natural Gas Futures

Important – Disclaimer By reading this Blog you agree that this Blog and any trading or investing ideas described are for informational and educational purposes only and do not constitute any advice or recommendation. The information contained in this communication is based on generally available information and, although obtained from sources believed by Oli Hille to be reliable, its accuracy and completeness is not guaranteed. This communication is not intended to forecast or predict future events. Past performance is not a guarantee or indication of future results. No liability is accepted by Oli Hille for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained herein or derived here from. Oli Hille and representatives are not stockbrokers, financial or investment advisors and do not recommend any stocks, bonds, options, CFD’s, currencies or any securities of any kind. Any financial securities that are mentioned throughout the course of this document are cited only for illustrative and educational purposes. Investing in financial markets is risky and it is possible to lose money. It is recommended that you seek a professional licensed financial advisor prior to implementing any investment program or financial plan. You acknowledge that Oli Hille and representatives have not promised you in any manner whatsoever that you will earn a profit from your personal investments. If you do not agree to be bound by these terms then please discontinue reading. These terms can be modified at any time without notice.

 

I have a score to settle with Natural Gas. In one of my most successful trading periods in the first half of 2008 I made a lot of money long commodiites like Cocoa, Soybeans, Soybean Oil, Coffee etc.

But I was so busy with those commodities that I failed to notice Natural Gas breaking upwards as well, and missing that trade cost me around $100,000.

So here we are four and a half years later and it is time to even the score! Of course as a trader I don’t actually think like that because the market can and will do whatever it wants to, and it never owes me anything. Still, no-one could accuse me of not being patient, and I am planning how I can take $100,000 or more from Natural Gas if it races upwards.

First some recent background. Natural Gas futures have just recently been at their lowest level for 12 years. See this monthly chart (click to enlarge):

Notice how low we are compared to the average price over the last decade. A return to the average is know as “mean revision” or “reverting to the mean”. You can also see the 2008 run up in price that I missed.

Here is the daily chart for the November 2012 contract showiing the lovely new 20 day high breakout that I have been waiting patiently for (click to enlarge):

Although I am strictly a technical trend trader, I do like it when there are catalysts that I can point to that have triggered the trade. And this from Nasdaq.com today re Monday’s rally:

Futures rallied as weather forecasters called for a cold spell through much of the central U.S. in the coming weeks. Traders say the expected drop in temperatures is likely to prompt the first meaningful demand for natural gas used for heating, one of the most widespread applications for the fuel.”

Will prices race up quickly into double digits like they did in 2003, 2005, and 2008? I have no idea, I am a simple trend trader. But if they do, you will be able to hear the cash register ring from wherever you are!

Happy trading.

 

Oli

Author

“Trading for Profit”

http://www.amazon.com/dp/B006TBPY6Y

PS Please “Like”, “Tweet”, Comment, and share with your friends.

No Comments »

RSS feed for comments on this post. TrackBack URL


Leave a Reply