Tag Archives: Natural Gas Futures

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.

 

Closing Clues for the Opening Zeal

I noted the surprising strength into the closing yesterday with surprise. No news was good news, but I’d expected a tail off towards the end of day, which never came. London has been closed for the last 2 days traders have come back to work today, and I think this plays into the early enthusiasm. No market moving headline news has come across the wire.

Europe is waiting for ECB news at 12:45 GMT. There’s also some potential market moving indicators at 8:30 EST ( Productivity Rev.) and the Fed’s Beige Book at 14:00 EST.

Assumptions:

  • We’re at the 50% fib levels on this bounce, so it’s a breakout or breakdown period. I’ll have to pick a camp and/or look at vol trades.

Plan:

  • Add some June 129 Puts after the opening vol fades.
  • Watch the June 125 Puts for a short entry. Will there be an ECB effect?
  • Looking for $2.36 on Natural Gas $QG_F
  • Reassess strategy if $ES_F starts passing 1306.

Truth:

  • Spin has a half-life