Welcome to the TFC Commodity Trading Forum.
Please feel welcome to join in on these informative ongoing discussions about trading futures and commodities.

The Trading Forum is intended for the open discussion of commodities trading. The management of this Forum does not agree or disagree with the ideas exchanged, and does not exert editorial control over the message posted herein. Read and post at your own risk. The risk of loss in trading or commodities can be substantial. We discourage the use of this Forum to promote trading that is acknowledged to be risky. Please note: many links from the Forum lead to pages on other web sites. We cannot take responsibility for nor endorse the information presented on those sites.

TFC Commodity Trading Forum

Re: March Nat Gas/In the Handbasket/Lee *PIC*

The stocks are not well correlated with NG as many of them make money 'pre-selling' NG at higher prices. So lower prices add to their bottom line and not the other way around. But here is March NG once again. I've put the 4ema on the chart. Long ago I wanted to find a way to avoid buying into a plunging market that looked cheap and attractive relative to what it had been. This is a very dangerous thing to do as prices can and do continue to plunge just like NG or RIMM or many other markets that fall precipitously without stopping. Many traders get sucked into so called 'cheap prices'.So what I found was using a 4ema. The way you use it is you don't buy a falling knife until you see 2 closes above the 4ema. One close above could justify a partial position with a stop below the last low. But two are needed to strongly suggest price has bottomed 'short term' and is about to rally back to the falling 20ema or very close to it at least. It works most of the time and when it doesn't you have your protective stop just under the last low. Here is the chart with a 4ema on it. See how price when in a downtrend continues to 'close' below the 4ema each day with the odd single day closing above but not two closes above it or you tend to see price rally back to the 20ema. Always best to wait for 2 closes above the 4ema to suggest more on the upside especially when the selloff is plunging like now. And of course the further away the 20ema the more upside potential there is. It works most of the time without guessing bottoms. Check out a bunch of charts with it on and track it to get a feel for it. It can save your ass from buying into a crashing market if nothing else. And lots of traders do that when prices look cheap 'relative' to where they were in their glory days.