Natural Gas Futures Chart

How Volatility Kills

I’m posting this so that I don’t forget… Never forget. You hear that phrase during wars, ethnic cleansing, 9/11, and in perfume commercials. Now you’ve read it on a random blog.

Here’s a frustrating example of how volatility can kill you on a future’s trade. In this case it was natural gas, which I’ve been following closely now for about 6 months and I was generally bullish, looking for good entries. This spike killed me.

It’s extremely important to consider volatility, when placing your stops. I’ve had a hard time adjusting to this with my future trades. ES trades very differently than NG for example. And I just learned that lesson again, the hard way. It can often feel like the market is chasing your stops, and in fact it probably is.

Here’s a good example how someone found mine. I’ll let the chart explain.

Natural Gas Futures Chart

If you are a novice never forget, this will happen again and again.