As a leading regulated broker in forex and CFD’s, AvaTrade South Africa offers several advantages for natural gas traders.
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 trading. 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 size smaller, it is safer to store and ship overseas. The liquid is non-toxic and colorless. By cooling the gas the actual volume shrinks by 600 times. It will also not catch fire in this state.
People now use natural gas heaters for many reasons which are both environmental and financial. These heaters/furnaces are not expensive to maintain; they do not break down often and use the cheapest and cleanest fossil fuel available. Natural gas heaters work well in any home. Natural gas power plants and how it works: 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 and every bit is full of power, which is released as heat, the heat spins a machine called a turbine, which powers a generator. Benefits include fewer impurities, less pollution, and with new technology cleaner energy production is being made and for far less expensive than other fuels.
Various factors can affect the natural gas price which include:
There are also different markets within the natural gas market. A spot market is when the 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.
Exchange: NYMEX
Trading Hours: 22:00 – 20:59
Start trading natural gas with AvaTrade South Africa today and benefit from our educational centre, the daily market analysis tool called Trading Central, which will send you updates multiple times per day to keep you informed. We offer generous welcome bonuses and personal account managers to assist you along the way.
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 this is considered a positive by day traders, who make their best profits from volatility. As natural gas becomes increasingly important to global energy needs, trading natural gas will also become an increasingly popular pastime.
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.
The best trading strategy for natural gas takes into account the seasonality of the commodity, along with technical trading signals. Because natural gas is most used for heating and cooling the price tends to make the greatest moves in the winter and summer months. During the spring and autumn 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 generate significant profits over the course of several weeks or even months.