Q:I WANT YOUR ADVICE FOR NATURAL GAS I HAVE BOUGHT 2LOTS @4.559 & THERE IS A VERY HUGE FALL IN PRICE. CAN U HELP ME ?
UDESHI
A:Hello Vinay,
I assume you have the December contract (you did not say) and you are out 50 ticks. Volume today was 24000+ in Dec and 112,000 in the Oct.
I am not going to talk fundamentals because it is a waste of my time and you can read that from all the market reporters with an opinion.
Dec made another contract low today, and on the chart has had lower highs daily since Aug 6, and that is bearish too.
On the weekly chart this market has had a tough time just to make a higher high than the previous week, let alone a rally, the last ended 6/30/08. Since then we have been in a bear market. I have had many people who want to buy this market for months, and I give them the same answer as I will to you, this is a bear market and until they break the long term downtrend line, it is a sell on rallies.
What you did was try to pick the "bottom" and in trading unless I have a long term bracket line for a price level to try to buy, but if wrong I have a close sell stop to protect losses. Also, I would only trade 1 contract if I normally trade 5 because picking a bottom is not easy, and Nat Gas has no level to buy except for 44.91 a level of support from 2003 that was taken out today.
For what reason did you buy this market? If you say it was cheap, now you learned a lesson, things that are cheap get cheaper. There was nothing on the chart to signal a buy, as a matter of fact it looks easy to stay short with a buy stop above the downtrend line.
Why buy 2 contracts? I do not know how much is in your trading account, but whatever you trade it should always be an insignificant amount if wrong.
When I have a trade idea, it has an entry level, a place where I will take a loss if wrong, and a place to take profits if right. If the risk is too much, I trade less contracts so I will not lose an amount that is not proper money management, and become emotional. The reward must be worth the risk, or I wait for a better trade location.
Sincerely,
Howard Tyllas
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