Anand04

Trading natural gas can be a profitable investment sector if you are a disciplined investor. Hardly a day goes by where you don't read or hear about energy prices in the news. Whether natural gas is slumping due to low demand, or a tropical storm that may turn into a hurricane in the Gulf of Mexico, there is always good price movement in natural gas prices.

Most Natural Gas ETFs match their indexes on a one to one basis. What that means is if the underlying index moves up 1 percent that day, so will that ETF. Where you aware that there are 2 funds that will double the return of the index? This will give you more reward for your investment so to speak, but it also increase your risk too.

The 2 funds are the Ultra Oil & Gas ProShares and the Ultra Short Oil & Gas ProShares. ProShares created the Ultra Oil & Gas. This ETF is based on the Dow Jones US Oil & gas Index. The ETF seeks daily investment results (minus expenses and fees) that correspond to twice (200%) of the index. Due to compounding the index might not match exactly to the fund over time. It is up to the investor to watch the fund to make sure it fits with their investment strategy. The advantage of this fund is that it will magnify exposure to the index per dollar amount. This is a leveraged fund. The primary stocks in this fund are from Oil and Gas producers. Currently about 20% of the stock in the index is made up from Oil Equipment, Services and Distribution. Some of the stocks in the fund include Exxon Mobil, Chevron, Schlumberger and occidental Petroleum, but that is just a snapshot of the market. The stocks in the fund may change by the time you decide to invest in this ETF. Check the most current prospectus.

One the other side of the coin is the Ultra Short Oil & Gas ProShares. This fund is the direct opposite of the Ultra Oil & Gas ProShares. This fund shorts the stocks in the fund. This is a fund that's bets on prices falling on the stocks in the index. Once again this ETF seeks daily investment results (minus expenses and fees) that correspond to twice (200%) of the index. Due to compounding the index might not match exactly to the fund over time. Short stocks can be difficult to do through your stockbroker, but this fund easily allows playing the short side of the markets and profiting by stocks going down.

This is just a brief description of these 2 funds. It is a bit risky, but if you think it meets your investment objectives, you should further investigate them as they can prove an attractive investment option with good reward.

Simit Patel

hi anand,

thanks for sharing this article. i noticed it was originally posted here. if you repost a public article, please be sure to provide the original author with a link back to their site. the original author's site is here.

provided the original author consents to re-publication, i encourage members to post any trading-related articles here if they'd like (or of course link out as well). if the originating site is sufficiently commercial, InformedTrades LLC may require compensation before helping to promote the site. regardless, members are encouraged to behave freely, worst case scenario something will be de-linked and/or slightly edited, with appropriate annotations.

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x3mtrading

Hi Anand
Welcome to the community and thanks for the informative posts.

-o0(GoldTrader)0o-

NatGa$ spreads
You can trade Natural Gas futures using spreads. Jerry’s current report shows spreads that have been profitable from this time of year in Natural Gas, for the last twelve years consecutively.

Quote:

Originally Posted by Anand04 Whether natural gas is slumping due to low demand, or a tropical storm that may turn into a hurricane in the Gulf of Mexico, there is always good price movement in natural gas prices.

When heating season begins, distributors unload Natural Gas to make room, to build up supplies of heating oil for the end of the heating season. This weakens the price of the nearby contracts. So, you are looking for spreads that short the early part of the calendar year and go long further out. You buy and sell these contracts simultaneously about now, and hold until January.

Here is a shot of another NatGa$ Seasonal

You trade spreads in the normal way except you are using close only charts, because we only get one good spread quote a day. You can use your momentum tool to call the turn, keep close stops at the bottom, and use trend following methods to average up your positions. A good Seasonal chart will show you the trend before it happens so you know within a few days if you are off course.

Attached Files

Seasonal Price Patterns in Energy Futures March 2004 By Jerry Toepke.pdf (239.5 KB, 15 views)