Natural Gas Trading
As a leading regulated broker in forex and CFD’s, Friedberg Direct offers several advantages for natural gas and other energy products.
Start trading natural gas with Friedberg Direct now and enjoy the benefits of trading with a Canadian regulated broker!
What Is Natural Gas and Liquefied Natural Gas
Natural gas is a by-product of fossil fuel formation, mainly decomposed organic matter deposited into the earth over the past 550 million years. The reserves are deep in the ground near other hydrocarbons like coal and crude oil.
Natural gas is treated and transformed into clean fuel to be used by various industries and products. Natural gas is a versatile fossil fuel used mainly for heating, cooking, transportation, generating heat and electricity.
Liquefied natural gas is a natural gas that has been liquefied for easy transport and storage. Natural gas is a major source of energy; however many places requiring it are far from the gas fields.
It is therefore cooled and made into a liquid. With its volume smaller (natural gas in its liquid size is 600 times smaller than in gaseous form), it is safer to store and ship overseas. The liquid is non-toxic and colourless. It will also not catch fire in this state.
Natural Gas Heaters and Natural Gas Power Plants
People now use natural gas heaters for many reasons that are both environmental and financial. These heaters/furnaces are not expensive to maintain, they do not break down often, and they use the cheapest and cleanest fossil fuel available. Natural gas heaters work well in any home.
Natural gas power plants and how they work: One large power plant can generate enough electricity for about 200,000 homes. The incredible thing is that even the fossil fuel it burns has large amounts of energy. These natural gas power plants burn huge amounts of fuel. Every drop is rich in power, which is released as heat.
The heat spins a machine called a turbine, which powers a generator. Benefits include fewer impurities and less pollution; and – with new technology – cleaner energy production is being made possible and cheaper than other fuels.
Natural Gas Price
Various factors can affect natural gas prices, including:
- The impact of seasonal weather including tropical storms and hurricanes.
- Economic growth: The demand for this resource goes up in a strong economy; with this, the price of natural gas goes up.
- Crude oil price variances: if the price of crude oil goes up, the products produced in the refineries also go up.
- Natural gas supply: The reserves kept across the US have a big impact on prices. Reduction in US natural gas inventories indicates upcoming mass purchase, which drives demand and the price of natural gas futures higher
- Time spreads: when traders bet on the upcoming season, it could be warmer or colder, creating a higher demand; and the price of natural gas increases.
There are also different markets within the natural gas market. A spot market is where prices represent the supply and demand that day. If there is a shortage, then the prices can become volatile and change rapidly.
The futures market is determined mostly by variables on expected supply and demand of upcoming seasons. This tends to be less volatile. Don’t forget to check out the futures rollover dates to know when the current contracts expire.
Natural Gas Market
Trading Hours: 22:00 – 20:59
Trading Conditions at Friedberg Direct:
- Minimum Trade Size: 100
- Increment: 0.001
- Options: Monthly
- MT4 Symbol: NATURAL_GAS
Start trading natural gas with Friedberg Direct today and benefit from the educational centre provided by AvaTrade. Friedberg Direct is a leading Canadian CFD Broker. We offer commodities trading along with Forex, and stock trading from a single platform.
Register Now and begin trading Natural Gas CFDs with Friedberg Direct.
Natural Gas Trading FAQs
- Why trade natural gas?
Natural gas is an interesting trade because regional factors tend to affect prices more than they do for most other commodities. This is because of the difficulties in transporting natural gas long distances. Because of this, natural gas pricing can be quite volatile, and traders can expect large price moves on a regular basis. Of course, day traders, who can make their best profits from volatility, consider this a positive, although volatility comes with inherent risks too. As natural gas becomes increasingly important to global energy needs, trading natural gas will also become increasingly popular.
- Is natural gas a better trade compared with crude oil?
Natural gas and crude oil are both energy commodities, yet they also have quite a few differences. Because both are energy commodities, it is typical for the same companies that produce oil to also produce natural gas. Until the 21st century, the price of natural gas and crude oil were highly correlated, but that changed with the discovery of huge natural gas reserves in the U.S. around the turn of the century. Because of this, natural gas prices dropped, but overall they remain more stable over the long term when compared with crude oil.
- What is the best strategy for trading natural gas?
The best trading strategy for natural gas takes into account the seasonality of the commodity, along with technical trading signals. Because natural gas is mostly used for heating and cooling, the price tends to make the greatest moves in the winter and summer months. During the spring and autumn, the price is more likely to consolidate. Because of these seasonal trends, it can be very effective to employ a breakout strategy to this market. With this type of strategy, the trader looks for the beginning of an emerging trend, which can potentially generate profits over the course of several weeks or even months.
These FAQs, comments/analysis do not take into consideration your individual personal circumstances and trading objectives. Therefore, they should not be considered as a personal recommendation or investment advice. They are intended for educational purposes only. Past performance is not indicative of future results. There is no guarantee that the contents or instructions will result in profits or not result in losses.