Nat Gas Day 1

Today was my first day trading natural gas. Having never actually traded it before in all seriousness, I needed some sort of plan coming in for the day. I came in expecting to trade it based on the same principals I had used in trading the Russell. However, I felt that simply trying to buy breakouts and sell fallouts wasn't going to pay the rent. I felt that I had much better market anticipation for middle range moves and wanted to get in on some of that. What I knew was necessary was to remain solid in my risk management and everything would be fine.

I sat down at and began to trade. I was bullish on nat gas coming into the day and started to scale into position. I noticed that stop losses and stop entries were getting tore up because of the difference in liquidity between ng and the russell. To explain this to everyone, imagine if you walked up to the grocery store check out line with a loaf of bread. The price of the loaf of bread in the basket is changing constantly until the store clerk runs it over his little red laser thing that makes the beep. You can watch the price change and as the clerk is running over the bread you see the price is pretty well settled at $1. Well imagine that the very act of him swiping the bread made the price jump to $3!! Now you're pissed.

So you see now how I felt.

This is where a little Bruce Lee water action was necessary. I realized that the current strategy I had was going to get destroyed due to the volatility and lack of liquidy. I decided I'd be better with a static stop, that was not entered into the market but managed by me, and a limit order entry. Due to the static stop I also had to pick exit points which I normally picked around 2.5x the risk I was taking on, in addition if I made a profitable trade and closed out my position I would increase my size the next time around due to the increase availability of risk and confidence.

Overall the day was positive. However, I lost about 1/3 of what I made due to commisions!!! UGH! So we switched companies and to give you an idea of the savings, we could by a nice Toyota Prias every month with what we'll save in commisions! (Wait I'm trading energy...I mean 2003 Hummer H2)

Positives:

I did an awesome job scrapping a strategy before it caused major losses and picking on that was profitable. I held decent risk management but felt that due to adrenaline I was taking 1x risk or 1.5x if I became scared. I should be patient with these. A few of them would've been more profitable but then a few times they would've stopped out. In the end, I feel that 2.5x is a good place to try and exit but if you feel that the market isn't going to get there get out, but ask yourself is it the market or is it your fear that's telling you.

Negatives:

1/3 loss in profit due to commisions was disgusting. This was resolved and that will help things much better. Due to the changing of strategies there were many scratched trades and bad decisions made early. I feel that a more solid plan needs to be made coming into the next natty gas trading day. I feel that there were a couple of time that I let the price trade through my stop telling myself that maybe I should give it a little more room. That is not discipline, and in order to be the trader I want to be I need to be disciplined and have a set plan for every trade otherwise don't trade at all.

Goals:

50% increase in account value over a month

Conclusion:

I'm going to have to take a couple of days off, hopefully just one, in order to switch to the new clearing firm, but when I do I still feel bullish on natural gas. I feel that it can easily make a move to the 9 dollar range in the course of 3 weeks. I think tommorow (pending the EIA) will be a retracement from today, pulling back to about 7.50 where it will close for the day only to rally on friday to new highs around 7.85.

Good luck and Namaste

The Martial Trader is Back

What's up everyone, I know it's been a while but I thought I'd let everyone know after graduating from Kent with a masters in Financial Engineering I am back to trading futures. I needed some way to gather my thoughts and felt like this might be a decent forum. Unfortunately due to privacy reasons I can't give gain and loss information like I used to but I certainly can give some of the ole mantra wisdom stuff.

Currently I am making a transition. After trading the Russell 2000 futures for 4 days, I've come up just under flat and feel that my momentum trading strategy will best be served in the Natural Gas contracts. The volatility in Natural Gas is so rediculous that the chances of a huge move, a money making move, seems much higher than it does for the equity indices.

Positives:

I am currently trading with a strategy that I have come up with that I am not allowing myself to deviate from unless I feel that the WHOLE strategy be changed around. The shell of the strategy is fairly simple. Tight stop losses, buying strong markets and selling weak (momentum or mo-mo as we used to say in this forum). The whole idea is to let the winners run as long as possible using trailing stops orders. It is really good that I have a set strategy going into the market on a daily basis. In addition I have a daily drop dead which is 3% of my total account. That is a bit risky, perhaps 1% would be better but at the moment it is necessary to take on a little larger risk in order to take advantage or a good move.

Negatives:

Unfortunately the strategy demands a certain market environment. I can not force it to win. I feel that sometimes the pressure to win increases my aggresiveness while the market type simply won't produce the outcome I am looking for. This goes back to the tride and true Martial Trading law, PATIENCE. I need to find that delicate balance between patience and aggression. That is where the true trader is defined. A good trader can come up with a plan and be disciplined, but a GREAT trader uses that little something extra (In Louisiana it's reffered to as Lagniappe).

Goals:

My Goal is to make a return of 50% on total capital in 1 month.

Course:

If I continue with my plan, staying disciplined and avoiding soggy, choppy, or weak markets then I feel that the goal is certainly attainable.

Tuesday's Plan

I will trade only the Natural Gas contracts. Until I have more capital and a better execution system I feel it is in my best interest to stick to one contract. (Remember the old Martial Trading rule on how to fight more than one enemy). EIA Petroleum comes out tommorow at 9:30. It shouldn't move Natural Gas but spreads often time can cause jumps. I feel bullish on Natural Gas and will look to buy on a break out above 7.14. If the market is showing weakness at 7.20 I will cover and look to short into a sell off down to 7.00.

Good Luck and Namaste