I dont get it ... a whole month without comments on the NAT GAS market ? here is an old article on Bolling http://www.davidrowan.com/2005/11/fuel-economy-hanging-out-with-nymex.html < excerpts below > "The first time Eric Bolling traded natural gas, he lost $120,000 of his own money in a single afternoon. It was 10 times the risk he thought he had been carrying, a misjudgment that threatened him with all the pernicious self-doubt he had seen destroy fellow traders' careers. Yet rather than wallow on the downside, Bolling left the New York Mercantile Exchange (Nymex) that evening with a brimming sense of opportunity. Sure, the crude-oil market had been good to him since he had begun trading eight years earlier. But how much more action could there be in the volatile, high-stakes game that was gas? If just one trade could lose him so much in a day, what kind of edge could he grab on the upside?" "Eleven years on, Bolling, 43, a former baseball pro who had to retire because of injury, is one of the world's pre-eminent energy traders, risking his personal fortune daily on movements in the prices of natural gas (as well as crude oil, heating oil and gasoline) - and mostly calling them right. For six hours each weekday, he stands screaming and waving on the exchange's cavernous trading floor, a couple of blocks from the World Trade Centre site. The deals struck here, in their hundreds of thousands, have pushed world fuel prices to record highs lately, as hurricanes have combined with Middle Eastern turbulence and China's soaring demand to create the volatility that drive opportunists like Bolling. "On the wilder days, they say you're going home in either an ambulance or a limousine," he says between trades on a frantic Thursday morning in October. "There isn't really a middle ground." "He has, he reflects, done well out of the hurricane season: with crude hitting $70 a barrel and natural-gas prices doubling in three months, the "Merc", as the exchange is known, is where the big money is. Bolling won't say how much Hurricane Katrina made him, but last year, according to Trader Monthly magazine, he made up to $15 million. He was the cover star for its June/July issue, devoted to the 100 highest-earning commodity traders in the world." "An hour into this morning's trading, though, Bolling is down financially, just as he was yesterday. He later admits that he is riding a $400,000 personal risk. "I hate losing," he says with a nervous laugh, glancing towards a computer chart showing gas slipping back from last night's $14.18 a unit to $13.80 ... now $13.77 ... now $13.75. "There's some people who are good at it, and those are usually the ones who don't last too long. Losing brings you further down than winning brings you up. It makes me much less talkative at home." He shuffles anxiously in his chair and then jumps up. "It's getting loud out there. I'd better get back." "It is a very physically demanding job," Eric Bolling says an hour later, with gas down yet another nickel to $13.70. "I mean, I've had my shirt ripped off my arm, hands jabbed into me. It can get real barbaric." The clerks he hires - prospective traders themselves - invariably have a sporting background. "With athletes, you typically have that will to win, an understanding of risk, and the ability to multi-task, to listen, and to make quick decisions. I might make 400 or 500 contracts a day," he says. -Bolling, shouting through cosmetically flawless white teeth as he throws one after another trade cards towards the inner ring, is in a tight position. "Long" on gas, having bought as prices were rising, he has belatedly recognised in the charts this morning a pattern known as a "technical key reversal", which he explains as a crucial shift in the price movement that signals the start of a new cycle. By the time the floor closes, the trend has dragged the price down further to $13.38. - -Chart-reading, he explains 10 minutes later, still visibly buzzing with adrenaline, is one of his most effective predictive tools. "It's herd psychology; you can read it in every textbook," he says in a hoarse voice. "You trade to a record high but settle lower for the day, and you open up lower on the second day. That's your key reversal. It's a little move within the bigger picture, and you can see it forming in the graph."- -That bigger picture still has the aftermath of hurricanes Katrina and Rita disrupting supplies, thus inflating prices. But the extra price jump yesterday followed a newsflash that a Louisiana pipeline hub was in better shape than expected. Initially prices slipped, but then speculative buyers piled in, sending the chart soaring - until a lack of underlying new demand sent the curve scurrying back down again as panic-selling set in. By the time Bolling recognised the pattern, all he could do was limit his damage. He has finished the day down, but feels vindicated that he called the key reversal correctly.- -"You have to be able to take a loss, even though you can't like it," he says, distractedly examining the day's order books. "That's been two bad days now. God," he exclaims, turning pages impatiently. "Those trades were not good at all ..."- -Had a particularly heavy loss ever caused him to cry? Bolling is momentarily taken aback, and then laughs. "No, no," he says with all the tough-guy resolve you would expect from a former Pittsburgh Pirates third baseman, albeit one forced by injury to quit after just two years. "Although ..." He pauses, then laughs again, this time a little nervously. "The closest I ever came to crying was in 2002, when my son was in preschool." He strokes his close-cropped goatee. "It was my day to read a story to the class, and I have a big position on natural gas, 500 spreads that happen to be the wrong way. The market was just ripping that morning. And I'm reading The Spider and the Fly, and I'm getting text messages about where the market's going, and the sweat is beating up on me. - -"But I'm still reading, and when they open it up to questions, the kids turn out to love the story. So I end up having to answer 30 questions, while I'm seeing the market going worse and worse. By the time I get to the trading floor, I am down - should I say this? - $2 million. Two million dollars - because I was reading a story!"- -He shrugs. "But what can you do? You try to put it aside, and you focus on trading. And to be honest, you make it back. Not all at once, of course. But you take baby steps, and you do." - - Bolling relies heavily on chart-reading to spot trends, and a sportsman's psychological preparation to remain "inside the zone"- -" Bolling arranges sessions with Flavia, his Brazilian "trading coach", to help him avoid "negative emotions" such as greed and fear" In 19 years' trading, he says, he has never taken more than a long weekend as holiday, in case the markets catch him by surprise. He also keeps his laptop beside him each evening, monitoring world price movements to avoid being caught on the hop. - -"I don't require much," he says. "I grew up in a lower-middle-class home in Chicago the size of this side office. My dad, a travelling salesman, never earned more than $40,000 a year. I think it would be arrogant, embarrassing, to spend lavishly." The embarrassment extends to discussing his work outside this building. "There's no way you can explain to someone like my father that before I came to work one day I was already down $2 million. Either they'll think you're lying or it would just bother them. And when you're up, you're not comfortable to discuss it with friends who have office jobs." - -Mostly, thankfully, his trading has been "up". So why doesn't he cash in and do something less stressful? He admits to not sleeping well: five, six hours at the most, and never straight through. "Time was, if I ever made a million dollars, I was going to walk way from here and go buy a hot dog stand on the beach in Florida," he recalls. "But you keep raising the bar. It's an addictive game, and no one leaves when they're on top. You're unemployable after this - you have a need for a lot of action. I think I'm stuck here for a while."- -Unless, of course, the markets make the decision for him. "During my monster slump, before seeing Flavia, I did think, maybe it's time, maybe the market's changing but I'm not changing with it. I've seen a lot of successful guys who went broke. There's one good friend, an extremely successful trader, the guy who for years you'd go to for gasoline. He had a gorgeous house in the Hamptons, an aeroplane, extra seats here that he leased out. One day, when he had a big position on, the US government changed the specifications for deliverable gasoline. The price exploded overnight. Boom! They took his house, his Hamptons place, his aeroplane, his seats ... He was so far in deficit that he had to come back in to work just to pay back his clearing house.-" -What happened to him? "Oh, he's long gone," Bolling says. "He now owns a strip club in Florida."- -"I'm spent, just physically drained," Eric Bolling says after the closing bell. "This week was work."-
Eric is a decent guy I know him from my NYMEX days. Lets not forget that positioning is huge in those markets and guys will throw down for some one taking there spot. Eric is stands in a killer spot but swings size. That being said Eric would be broke if it was 100% screen just like Tomy Baldwin. Pit trading is far far different than the screen, no friends to cover your ass. Natty is for the big boys. Sandy has more skill/balls in his pinky than Eric has in his whole body.
i've been taking small positions the past few weeks and been getting chopped up - haven't lost too much, but its definitely a difficult market to trade. I bought into yesterday's weakness --- this drawdown as of late amongst the winter freeze will be bullish, very bullish, offering some nice price support. of course, thats my view and this isn't a scalp position. but once again, with that inventory # way below expectations I'm a little surprised the market sold off about .60 from peak on thursday. not surprised if front month ended 8.60-8.80, but here seems goofy, especially considering oil's strength. otoh, perhaps oil's strength is propped up a little by USD weakness. btw, my blog journal documents my nat gas trades if you're interested - please comment if you feel.
this market is crazy. (which means I'm getting my ass handed to me) the withdrawal #s for this current time period are going to be in the extreme from this cold weather, and all I can find is that the NOAA forecast is scaring the market. Accuweather conflicts. Its comedy, because at times I 'relied' on NOAA's report, the market went opposite to it, going with Accuweather. Now its the other way around. wonder what the other weather sources (ie weather derivatives) are saying. Any better ideas of whats going on here? .50 down today and winter is just getting started. Three days ago we're hitting 3 month high; now we're approaching year lows on Jan's contract (only 40c away, depending on how you look at this). And believe me, nothing has terribly changed fundamentally, except that we're inching closer and closer towards storage facility fullness being a complete non-issue for this season. At times like this I wonder if Citadel has any of the old amaranth book remaining. [on the verge of giving up NG trading]
this market has been overvalued for quite some time now, mostly as the result of another large funds influence. The strategy was not too unlike the one employed by amaranth. they started getting very long winter (esp. Dec) from too high of a price (7.85 average dec position by my estimates) and spent whatever bullets necessary to keep the market propped up waiting for a turn to a colder forecast. rolled forward to jan, (estimate of avg. long in jan is 8.20). great strategy had the market been priced much lower. unfortunately the fundamentals don't support this strategy from this level and now this long fund is feeling the pain of its ways. the fund however is much larger than amaranth was and most likely more risk adverse since they trade in a variety of other commodities/equities. weather will obviously be a factor going forward but any forecast rallies at this price are good selling ops. this weeks storage # is prob about a -10 draw thus closing out november (20% of winter) with 3,407 still in the ground, and next weeks # is looking to be a draw of about -168. It is probable at this point that we finish out dec, start jan with over 2,950 in the ground, and possible that it is actually over 3,000! SHBL
this market has been overvalued for quite some time now, mostly as the result of another large funds influence. The strategy was not too unlike the one employed by amaranth. they started getting very long winter (esp. Dec) from too high of a price (7.85 average dec position by my estimates) and spent whatever bullets necessary to keep the market propped up waiting for a turn to a colder forecast. rolled forward to jan, (estimate of avg. long in jan is 8.20). great strategy had the market been priced much lower. unfortunately the fundamentals don't support this strategy from this level and now this long fund is feeling the pain of its ways. the fund however is much larger than amaranth was and most likely more risk adverse since they trade in a variety of other commodities/equities. weather will obviously be a factor going forward but any forecast rallies at this price are good selling ops. this weeks storage # is prob about a -10 draw thus closing out november (20% of winter) with 3,407 still in the ground, and next weeks # is looking to be a draw of about -168. It is probable at this point that we finish out dec, start jan with over 2,950 in the ground, and possible that it is actually over 3,000! SHBL
very standard strategy here that is employed in power and natty. certain months z/f/g/h in natty and m/n/q in pwer are your bang for your bucks months. large players and funds will hold this positions in these months to the bitter end or until it is very apparent there isnt going to be all encompasing hot/cold weather. when they reach this point they puke and roll into the next month. wathc the top forecasters 30/60 days and you will see the relationship. Its not an accident earth sats 30/60 came out before this happened