How to hedge Natural Gas and Crude?
- Thread starter vincentvega
- Start date
Quote from vincentvega:
Broker that the sir is using has the same margin for both NG and CL, although I may have that wrong. I was thinking toward NG. Maybe just short NG everyday until Sept 12...why not?
When you trade ng against cl it is lower margin requirements.
spreads have lower requirements.
Austin will help you along the way, go join his website
Austin ,just slip the finders fee under my office door
Quote from vincentvega:
Input from the real traders?
There are maybe a dozen on here, I am not kidding.
You are in the wrong place if you need actual advice pertaining to trading the financial markets.
Having said that, trade the QM and QG. You still have not told us your strategy/holding period...etc.
Quote from vincentvega:
Input from the real traders?
Ok... first of all, there is no way to effectively hedge a short-term trade in futures. Of course that is a natural human desire (eliminate risk) and therefore we hope there is logic to it, but reality is hedging directional short-term trades is impossible.
Trying to use cross-market symbols like ES or YM or 6E won't work, because they are only semi-correlated and often as not you'll just have double the loss instead of small loss - larger win.
Secondly, if your account is too small for trading CL and you truly are "proficient" then you don't have enough capital for two contracts of anything.
Lastly, don't let the CL's impressive potential lull you: it is a veteran trader's symbol only. It will eat newbie traders for breakfast, lunch, dinner and snacks in between.
That's just the flat-out truth, so prepare yourself accordingly
Quote from austinp:
Ok... first of all, there is no way to effectively hedge a short-term trade in futures. Of course that is a natural human desire (eliminate risk) and therefore we hope there is logic to it, but reality is hedging directional short-term trades is impossible.
Trying to use cross-market symbols like ES or YM or 6E won't work, because they are only semi-correlated and often as not you'll just have double the loss instead of small loss - larger win.
Secondly, if your account is too small for trading CL and you truly are "proficient" then you don't have enough capital for two contracts of anything.
Lastly, don't let the CL's impressive potential lull you: it is a veteran trader's symbol only. It will eat newbie traders for breakfast, lunch, dinner and snacks in between.
That's just the flat-out truth, so prepare yourself accordingly
Options will hedge it - not enough to trade anything. I say it''s going to be a coin toss on the first trade!
Quote from vincentvega:
Options will hedge it - not enough to trade anything. I say it''s going to be a coin toss on the first trade!
to "hedge" is to reduce or eliminate potential for profit.
all that an option can accomplish is to make a trade position break-even from the onset with nil chance to ever make one dime after dual execution costs, or lock in a fixed measure of profit from a naked futures contract position
that's it... you can create a no win / no lose trade, or you can hedge = remove further profit potential from an already profitable futures trade. there is no third choice
Quote from vincentvega:
I say it''s going to be a coin toss on the first trade!
A coin toss has a 50% chance of coming up heads, if you are trading this way you mine as well go to Las Vegas and gamble. You @ least have a better chance of breaking even, and you might even get free food/drinks!
The first step is to find out what the relationship is between them and whatever else you're trading. Is the correlation strong? Weak? +/-?. Once you have that answer you have a starting point. The next step is to compare the leverage between the instruments you are trading and also the volatility relative to the instruments you are trading. With the correct answers to these questions you can reduce your risk by a significant amount.