Very good question, I hope I can give a good answer. I have been trading natty futures since 1996, and physical since 2000. I can tell you one thing for certain, natty is unlike most other trading vehicles in the dynamics it has. Trading outright directional can run you over faster than anything out there. It can be done, but you really need deep pockets. I have been succesful for a long time, unfortunately the owner of the company I work for is not very fond of speculative NYMEX trading and has rules that make directional trading quite difficult, like handicapping me. I still do a little here and there, but I can trade spreads without the handicapping from the boss, so that is what I spend my time on. The beauty about spreads is if you understand the physical market, you can do very well with them, regardless of market direction. Spreads are much more fundamental in nature than outright futures. I do use CQG, more traders use TT (Trading Technologies), but for what we do, CQG is cheaper and does just fine. The spread symbology is NGE (for natty globex) and then S (for spread) and then how many months out from the first month of your spread, and then the first spread month/year. Example- June/July 2009 is NGES1M9. The June/December would be NGES6M9, since Dec is 6 months past June. Also, whatever you are doing with the front month of your spread is what you are doing on the buy/sell, which is different than what I talk about here as I still use floor trading lingo.
Closed out of my Q/U that I've had on since mid march, Bot them at .053 and sold them today for .091.
PAPA Would like to learn more about the delivery process on energy. How does it work? Is it like grain where there are exchange warehouses and receipts? Do you know where I can get that information? Am interested in energies as a side trade along with grains (roll every month, delivery every month, seems like so many more opportunities every year vs grains (H,K,N,U,Z) Thanks
Now that June is off the board, I feel that once again fundamentals can be cast off for a week or two here. The level of bullishness of the dumb money in UNG is astounding and can be used as a great tool. The volume on that sucker has been huge for several weeks now, thanks to guys like Cramer and the Fast Money crew. I believe smart money will exploit the dumb money again and let this market get bid up, only to quash it going into expiry again next month. I plan on reversing my bear spreads post EIA and looking at something like N/Z (buying N/selling Z). The poor fundamentals should come into play once again late next month, when it matters (expiry). Good luck all.
Sorry to go through this clarification again, but you bought N/ Sold Z on this one, correct? Also, how you feeling about the V/X these days? Seems like it's running into some resistance in the -.7 range. Thanks again for your contributions