Wt Nat Gas 2x Discussion Threads

[andrewbaker] 20/7/2009 14:46

Nice rise recently, and now a chance to buy on the dip. I think I would have bought the unleveraged in hindsight, but am happy to continue to hold the leveraged as already in it.

[h101] 03/7/2009 06:59

Unfortunately the trend for the underlying ETF NGAS is still down. I'm down about 10% on it and thinkng of throwing the towel in over the summer.

[notanewmember2] 02/7/2009 14:12

now -57.93%, ok so its moving again

[notanewmember2] 01/7/2009 10:31

As an experiment, I put in £100 into the LGNA in March. It is now down 54.54%, and hasn't budged for a little while. Looks like it cannot go to zero. Well there's a bonus.... Will keep you lot posted.

[andrewbaker] 25/6/2009 13:48

bud-

Natural gas can make you poorer as quickly or more so than it can make you richer. I view the upside potential as greater than downside, so I'm in long. There are those who feel that this is a bad play because there are so many piling in whilst there appears not to be the demand, plus stocks are high and supplies plentiful. As far as I can make out, if the US gets a heavy hurricane season, NG will do well; otherwise not so well. For me, more new homes are using NG, both in the summer (in the US) for air conditioning, and in the winter for heating, as well as fuel, of course.

The volatility in price doesn't help on leverage, but I'm staying in for now.

[bud] 19/6/2009 17:37

OK H, thanks for that. I think I get it now.

[h101] 19/6/2009 08:27

bud - it is also about trends and volatility. They determine whether you make money.

With zero volatility and a level share price the leveraged version has no benefit.

With high volatility and a level share price the leveraged version trends down.

With high volatility and a slightly rising trend in the share price the leveraged version trends level.

For a long term play with leveraged versions you need the underlying share to be low volatility and trending up (IMHO).

I've bought NGSP (ETFS Natural Gas in £) since I think it is just turning. So even if it stayed level I wouldn't lose (low risk). Had I bought the leveraged version and held, I would be at high risk of losing money.

My strategy is: if NGSP gets volatile I might try to guess the lows and buy LNGA on them (high risk). If I see a rising trend continue with low volatility, I will buy LNGA and hold as long as this continues.

[bud] 18/6/2009 23:31

andrew - i get the maths argued in %ages but surely it's absolute numbers that count? High was c. $90, reasonable multi year mean probably c. $30. Currently $3, has to halve to lose your money altogether (give or take 0.99%p.a.) Not too bad a medium term risk reward ratio, especially given recent vast increases in trading volumes. And it's out of kilter with rising oil to an almost unprecedented degree. Grateful for views..........

[hodginsjkp] 12/6/2009 16:39

Maybe? spreadbetting NGAS (or a US equivalent) is better than an actual purchase of a leveraged ETF???

[h101] 12/6/2009 12:48

I'm waiting for the trend to turn up. I can't predict short term movements in gas but I do think it must be near its low. If (!) this behaves on the way up in as non-volatile manner as it did coming down (recent bumps excepted) then this might be suitable for a leveraged play. However you need to be careful to get out if the trend turns down or level.

For trend-setting are there any suggestions for moving average parameters? I'm using an Exponential MA 50 for my medium term trend and Exponential MA 15 for short term. Both of which are trending down!

[notanewmember2] 11/6/2009 11:16

Not for the novices this one. It's like trying to fill a bathtub but it is filled with holes.

[andrewbaker] 05/6/2009 16:21

sherbs-

LNGA is good for a while and as long as volatility doesn't stay high because over time leveraged ETF degrade in price due to the their construction: remember the leverage is on a day basis only. So, a 10% fall on day 1 and 11.11% rise on day 2 puts the unleveraged back where it started, but in the case of 2x leverage (as is LNGA, it will only get back to 97.76% of the price. A 2.24% loss over the two days. Extrapolate that into the future, and you can see that even if NG does not drop in price over an extended period (and also even if it goes up some), LNGA will lose. My point: don't hold leveraged positions for the longer term.

If and when LNGA gets/stays volatile, one can consider NGAF if an uptrend is still expected. All IMHO DYOR.

[sherbs] 05/6/2009 13:14

Ok thanks

I'm in long term in SIPP @ $2.70 (50%)
I certainly wouldnt day trade it but have made a bit short term on LNGA in ISA (50%) but am out at the moment & looking at technicals for reason to buy in, hence my waffle.

[andrewbaker] 05/6/2009 10:09

Natural gas prices fluctuate widely for many reasons and trading in NG is notorious for its ability to lose money very easily. Having said that, right now NG is IMHO a good mid to longer term bet. Whilst there are large stocks currently, and at least one LNG ship trying to sell its cargo, production is down as drilling rigs have ceased operating due to oil's price drop. Summer usage in the US is less than winter, but air conditioning needs can increase demand and many buy at summer prices for the winter, so the differential is reduced. Also, the oil/NG long term price ratio is 6 (as oil's calorific value is 6x that of NG), yet now it is 18. So either oil falls dramatically, or NG rises. I'm backing NG rising.

sherbs-

with respect, I don't agree with your prediction of new lows soon.

[sherbs] 05/6/2009 03:17

big volume on this today
think we might be seeing new lows soon

[notanewmember2] 26/5/2009 17:03

Stronger £ is hurting this.

[bmw30csl] 22/5/2009 15:17

weak dollar hurts it though right?

[sherbs] 22/5/2009 15:04

yes - eligible for ISA (& SIPP)

[bmw30csl] 22/5/2009 14:51

can this be ISA'd?

[sherbs] 22/5/2009 13:10

Just bought back in @ 2.81. LTH
Absolute no brainer imo

[andrewbaker] 11/5/2009 13:16

Bought in last week and sold today for a nice return. Think I'll be back in again soon: concerned the stock markets may fall back this week and commodities of late have been following too closely. If this doesn't happen, then I'm back in sooner.

[warre] 07/5/2009 17:24

Elliott Wave International are expecting a return to the July 2008 highs for
Nymex Natural Gas in due course. If so, looking at the chart this will be a multi-bagger and it has only just broken out; I'm in!

[andrewbaker] 06/5/2009 13:10

Might be in for a punt right now.

[arai] 07/4/2009 23:05

Hi, can you tell me a bit about the leverage factor this holds re a nat gas punt ?

Looks good from here over the next few yrs, is this the way to go ?

Thanks.

[notanewmember2] 10/3/2009 11:37

I'm in for £100 worth - lets see where this goes.