Since the inception of ETF natural gas funds in 2007, its success has had a double edge sword effect on the gas market as a whole. Not only do natural cataclysmic events dictate the rise and fall of prices, the weather, and futures trading can also effect the daily wholesale and retail pricing of natural gas. When traders expect a dip in the market they are inadvertently cause real price index to change when they all buy or sell according to the world news on the product. Sometimes some small piece of information that a futures trader gets a hold can cause him or her to panic, and trigger greater changes in the market, due to other investor following suite.
This lemming’s effect can make millionaires into hobos if people are not careful, and avoid over reacting to what the media portrays on a daily basis. Always verify from multiple sources before you start selling short, as unthinking reactions can backfire on you the trader as well. There are people who will start market innuendo to try and make a quick buck, and they can at times, but the market will correct the fund in no, and you will be back to your previous levels.
Taking minimal risk with average investment sizes will make you a player in the natural gas ETF game for decades to come. Even after “retirement”, a lot of people still like to keep their hand in the game and these funds are perfect for the now hobbyist speculator. Keeping up on the industry, and making sound trades will prevent those avalanche type scenarios that can burry the small investor under the rubble of a major downturn in the futures trading market. You may want to consider keeping your smaller capital on the short fund side, as it usually will make a little more short turn around money that will allow you to create additional investments in other commodity futures trading.
Since this is a reality new market fund some have been skeptical of it’s performance, and have been waiting for the other shoe to drop so to speak. The truth is it has not dropped nor have the funds in a dramatic way. Some people will get into a rut with their trading and do not like to learn new ways of profiting as they are uncomfortable with change. The person that can steer clear of such close minded thinking will flourish in the ETF fund markets for a long time to come.