batty natty

Rumors of a hedgefund blowing up and frantically selling out a long position. Mild winter weather across the country. Oversupply. Calls for prices to reach $1 and below. All the melodrama you could ask for is playing out in natural gas.


I glibly declared the sell-off ridiculous and went long the Feb contract of the NG future a few days back. No stops, because I was confident. When I woke in the morning I was awash in a 50+ tick profit and asked my 7-year old if I should take the $500 or not. He said 'take it Dad.' Of course I didn't. I judiciously placed a stop at break-even though. It took all of about an hour for my stop to get hit, and for 50+ ticks evaporate into a 1 tick profit.

I can say I felt annoyed. But also amused that something like this could happen so suddenly. I got back in long that same morning and after a meager 10 tick profit decided to place a stop at break even again. And again, it was hit in short order. I'm thinking, hmmm. This is curious indeed. One more trade for the morning. This time it goes against me right away for about 15 ticks. Wow, what a fine mess I've gotten into I think to myself. I take a breath and wait. It comes back to break even. It catapults to plus 16 ticks in what seems like seconds and I get out. Phew. It was fun. My 7-year old was unimpressed though that I blew a $500 profit. This is toy money (as in money for toys) we're talking about here!

Next day I'm at work and not trading. That's when the real rally happens of course, when I'm flat. Did I miss making over $4,000? No, not really. That's just not the way I see things. I get long that evening and repeat my previous mistakes. With my position positive 35+ ticks by morning, I set a stop at break-even. Where do you suppose it ends up going in the next couple hours? Yep, out for a 1-tick profit.

Mental note to myself. Take 30 ticks when you can. Next, I go long again about 20 ticks from where I was stopped out and push aside the feeble thoughts of ... 'if you didn't get stopped out, you'd be up 20 now ...'. Yeah sure. Whatever. I'm long now. It takes but a few minutes and I'm up 20 ticks again. Stop at 10 ticks. Up 30 ticks, stop at 20. And so on until I have a locked in profit of 40 ticks. It gets filled and I'm done for now.

When my 7-year-old comes home from school today, I'll have a better story to tell. I have no doubt he'll expect some free money for Hero Factory toys. I'll probably give it to him, along with his brother. You can never have too many legos in the house.