74.80 % of retail investors lose their capital when trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.80 % of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Academy News NGAS futures trading

NGAS futures trading

Published: 07.06.2023

Trading on commodity markets is one of the key elements of the global economy. One such commodity that many traders follow is NGAS, or Natural Gas. In addition, Purple Trading clients can now also trade natural gas in the form of NGAS futures.

Natural gas is a fossil fuel that is used for power generation and as a heat source. It is a mixture of different gases, mainly methane, which is extracted from underground. Natural gas and crude oil are key energy commodities for many countries and their trading on commodity markets is an important segment of the global financial system.
 

Why is natural gas traded?

NGAS online trading allows natural gas producers and consumers to hedge against future price fluctuations. This is important because natural gas prices can be very volatile and can change quickly due to a variety of factors such as weather, politics, economic changes etc.

Investors and traders also trade NGAS online as an independent financial instrument that can potentially provide returns separate from markets such as stock, bond and other markets.

All futures offered by Purple Trading

What influences the price of NGAS on the market?

The most important factors affecting the price of NGAS on the market include:

  • Weather: demand for natural gas is strongly influenced by weather. In winter, when natural gas is often used for heating, cold weather can increase demand and thus the price of natural gas.
  • Inventories: reports on natural gas inventory levels can also affect prices. If inventories are low and demand is high, prices can rise.
  • Economic factors: ueconomic factors such as GDP growth can affect energy demand and therefore the price of natural gas.
  • Geopolitics: events such as conflicts or political powerplay can affect the production and distribution of natural gas and thus the price. For example, conflicts in areas with significant natural gas production, such as the Middle East or Russia, can cause price volatility.

Why trade NGAS online?

Trading NGAS online is attractive to both traders and investors for several reasons:

  1. The price of natural gas is often unstable and volatile, which presents opportunities for profit.

  2. Trading natural gas can provide portfolio diversification because gas prices can move independently of other markets.

  3. With the growing emphasis on clean energy, natural gas can be an attractive investment target as it is considered a "cleaner" alternative to other fossil fuels.

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Specifics of NGAS online trading

Natural gas trading has several specific features. In Purple Trading, the NGAS online trading itself is carried out through NGAS futures contracts.

 

NGAS futures

To trade NGAS futures means to trade agreements to buy or sell (deliver) a certain amount of natural gas at a predetermined price. Such a futures contract expires at a pre-agreed date in the future. By that time, however, the trader should no longer have the contract, as he is only speculating on NGAS prices, not actually delivering any quantity of natural gas.

With Futures instruments you can speculate on the rise or fall of the NGAS price and thus be able to profit whatever happens in the natural gas markets. If this market appeals to you, read how to trade futures.

What to look for and what to look out for?

If you are going to trade natural gas, it is important to keep an eye on the factors mentioned above that affect its price.

It's also important to keep in mind that trading NGAS online can be risky. Prices can be very volatile and trading with leverage can increase potential losses.

It should be remembered that trading natural gas, like trading any other commodity or financial instrument, requires an in-depth understanding of the market and careful analysis. It is important to monitor market developments, to be informed of current events that may affect prices, and to have a clear investment or trading strategy.

In conclusion, natural gas trading can provide attractive opportunities, but it is also associated with high risk. Whether you are an experienced trader or a beginner, it is important to properly assess your trading objectives and risk tolerance.

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Key terms

CFD - contract for difference
Show answer
It is a trading instrument; its value is derived from its underlying instrument, which can be for example a stock index or a future contract. Settlement of this instrument type is always performed financially, therefore the client speculates on future value difference of the underlying instrument while he/she does not become the owner of it.

 
Commodity currencies
Show answer
These include the Canadian dollar (CAD), Australian dollar (AUD), New Zealand dollar (NZD). The value of these currencies is influenced by the value of the commodities that the countries produce. For example, CAD is influenced by the price of oil, AUD by the price of gold, iron ore and coal, and NZD by the price of dairy production.
Fundamental analysis
Show answer
In fundamental analysis, the forex market is analyzed using macroeconomic data, social or political influences that can affect the demand for a given instrument.
Futures market
Show answer
Futures markets trade standardized futures contracts. It is designed for larger capital traders. Futures markets are centralized exchange markets.
GDP - Gross Domestic Product
Show answer
GDP is the sum of all goods produced and services provided in a country.
Technical analysis
Show answer
Technical analysis is a form of analysis where the trader examines the price. Charts are used for analysis to show the movement of the price. The assumption is that all the information is already contained in the price.
Volatility
Show answer
Volatility indicates the volatility of the price of the asset. It shows how much and how often the price changes. High volatility increases risk and low volatility decreases risk.
74.80 % of retail investors lose their capital when trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.80 % of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.80 % of retail investors lose their capital when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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