The US Energy Information Association states that the use of natural gas is projected to increase over 60 percent over the next 20 years. Natural gas should be in huge demand for providing power to the electric power sector.

One way to trade energy is to trade the Natural Gas ETF. What is a Natural Gas ETF? An ETF is similar in a way in which you trade stocks. With a Natural Gas ETF, you can buy it on margin and trade through your regular stock account. You can also trade them in your IRA and SEP-IRA accounts.

But isn’t Natural Gas traded as a commodity or futures, and isn’t that risky? True you can trade natural gas in the futures market, but that means opening up a separate trading account and constantly looking for price updates. Also when trading futures you can be exposed to wild price swings and be subject to margin calls.

The Natural Gas ETF is traded just like stock. If you already have a stock account, it as simple as deciding which etf to invest in. In fact you can open a stock account at sharebuilder.com and trade ETFs stocks for $4.

There are several types of Natural Gas ETFs. One way is a pure futures play like the United States Natural gas fund (UNG). This fund purchases near month natural gas futures on the New York Mercantile Exchange. When the near month contract is set to expire, the fund then “rolls” the holdings into the next month contract. This happens each month since there are natural gas future contracts for each month.

You can also invest in natural gas exploration like the SPDR S&P Oil & Gas Exploration & Production ETF and the Dow Jones US Oil and Gas Exploration & Production. These ETFs purchase baskets of stocks that are involved in the exploration and production of natural gas. For example the SPDR S&P Oil and Gas Exploration and Production fund has included stocks such as Exxon-Mobile, Chevron, Devon Energy and Conocophillips in the past and may in the future.  Check the latest holding statements in those ETF’s to see their current holdings

There is also an equipment and service natural gas ETF.  The SPDR S&P Oil & Gas Equipment & Services ETF tracks an index of oil and gas equipment and services companies. Some of the stocks in that ETF were Atwood Oceanic Inc.,BJ Services Co. and Dril Quip Inc.

Trading natural gas is very easy to do. As long as you have a stock trading account, you can begin to the Natural Gas ETF.

Possibly Related Posts:

• Natural Gas Futures, How They Effect Natural Gas ETFs
• Natural Gas ETF Short Funds
• Natural Gas ETFs and the CFTC New Rules
• Wildcatters Exploration & Production Equity ETF Review
• Why you should trade the Natural Gas ETF over futures and index funds.