The margin requirement is about $4500 / lot. If you buy 1 lot and hold it till expiration, then you have to pay ~$50K for the physical NG.
I am talking about how easy big capital move in and out of futures market. So how much worth of physical is irrelevant. BTW, we don't know how much the guy's trading capital is. If he uses 1800M to generate 180M, it is not a big deal.
I can totally believe him that he's made that much money trading the natural gas futures. It's not unheard of that commodities traders make a huge amount of money trading them. One, the commodities is different from other financial assets in that it's an actual physical thing that has a predictable pattern of demand and supply. Like the guy said in the video, natural gas is used everywhere and the harvesting and supplying and transporting it has a relatively traceable and scheduled time so if you become familiar with its patterns and its schedules then it's not hard trading it using what you know. Second, from what I can understand from the video and I stand to be corrected, he's also facilitated and created many of the trading activities that he ended up profiting from beforehand. For example, he's mentioned he created pipelines to transport natural gas and then created trades to take advantage of the location spread. So he's basically become a dealer who has the knowledge and is involved in the primary market of the commodity and then created a secondary market for the same commodity natural gas and the trader trading it. He can do that because he's dealing with the actual physical commodity, the actual thing that goes into every aspect of people's lives and business activities. Notice he mentioned how widely that natural gas is being used; it's used both as an input to the manufacturing of other products and also as an end-product that people use directly. That's a wide spectrum of opportunities in at least the primary market and plus the secondary market of natural gas that he created to profit from. Yeah of course he's rich. But that's something unique that you can only do with physical commodities in this case natural gas but not with other financial assets and is only available to someone like him who is directly involved in dealing with the commodity. That opportunity is just simply not available to us ordinary retail traders who are at the very end of the "food chain" of the life of a financial asset sorta speak. So overall, it's a very informative video that gave us many insights into commodity trading but we just need to realize and acknowledge also the limitation of the application of the information in the video to us retail traders.
%% SOUNDS like it; another lesson is/ if in a hi crime neighbor hood like a bannana republic or like Citadel in chicago, may want to moVe out!! Amen.................................................................... Most millionaires in stock market buy every month for 30 years; i think Don Bright Daytrading had a one or 2 daytrading .Most have low or no mortgage Most millionaires make it in in Usa , by business,[small business] finance, energy, real estate , public stock market[source Forbes, Millionaire Mind Book, Dave ramsey list+ personal observation.] Most of those in USA did not inherit wealth. One made it sellin' these= ''pet rock's '' LOL
Exactly. The video is actually pretty bad in this regard, absolute numbers alone are meaningless. Give me the % return or something.
The guy worked at an energy trading company. So it wasn't like he opened up an IB trading account and ran it up to $180M. Geez. Some people on here are so retail minded thinking. For an energy trading firm, a $180M might or might not be that big of profits.