I have no position to talk up or down here, but Nat Gas supplies are the highest they have ever been in the history of the contract. This is not good. Sure, we might have a freaking ice age this winter, but that aside, if we don't, I see no reason for this contract to trade this high. My guess is 3.00 to 3.50 is around the corner for the nov and dec contracts. FWIW, I think Crude is insanely overpriced as well and is heading back to the mid 40's. LOL. But what the hell do I know, it's easy to make these calls when you don't have a position. And I have to disagree with you about a dollar not being a big move. It's not the leverage, it's the fact that it's 1,000 ticks!!!!! No trader worth his salt would let a position run against him that much unless his name is Brian Hunter and he has 9 billion to play with. Of course 7 billion of that is gone now so we know what happens when traders sit on losses.
Nat gas doesn't compete with crude oil as a power plant fuel but it does "compete" with refined products i.e. heating oil.
U know what the amazing thing is Mav? The amazing thing is someone who is down 1200 ticks still have the ability to average down a couple of more times. More power to him!
Here is a quote from Mark Fisher for the rich guy who keeps averaging down: If you think you have an edge buying something at 6 dollars, should 2 weeks later be still trading at the same price or even a lower price? or should others have to pay up to get in?
Yes, that was sloppily stated, wasn't it? Heating oil, like kerosine, gasoline, diesel, is refined from crude (crack spread); power plants tend to use coal. Usually crude (heating oil) tends to not stray not too far from natural gas. That said, I have had some success with trading spreads such as long gas/short heating oil and long gas/short crude. I would not suggest trading natty by itself in size. I probably should just start trading natural gas and coal as a spread, but when I last looked, I was not impressed with the liquidity of the coal contract. I don't even think IB offers coal.
Is this a quote? No one, not even a great trader, knows what's going to happen in two weeks. It is arrogant to presuppose that one has that kind of foreknowledge. Those who are short might well have to pay up to get out, like those who are (were, says those who have lost billions trading this stuff) long had to take less to get out. I guess we'll all see.
Bingo! Averaging down can work over and over again. All it takes is one time when it doesn't. Toast. Look at all the great traders. Not a single one of them made money this way. This may sound harsh, but it is really just a way of avoiding pain and realizing that you don't know what you are doing. If you average down wih leverage, sooner or later, you are toast. Learn to take losses. Jayford
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