There are several ways to trade the natural gas market. One way to invest is by using a natural gas index fund. Another way is to trade the natural gas futures on the New York Mercantile Exchange or on the Intercontinental Exchange. Still another way is to purchase various natural gas stocks.

I’ve found that the best way to trade this market is to use a Natural Gas ETF. What is an ETF? ETF stands for Exchange Traded Funds. ETF are traded just like stock. You trade them through your stock broker. You can put them in an IRA or a SEP-IRA. You can buy them or even trade them short. They are fully marginable. Some Natural Gas ETFs even pay dividends.

Why Natural Gas ETF?

There are many different types of Natural Gas ETFs you can trade depending on your view of the market. There is an ETF that’s based on the movement of prices of NYMEX natural gas futures. There are ETFs that invest in natural gas drillers, exploration and suppliers. You see you have many choices on how to invest in Natural Gas.

ETFs are more transparent then mutual funds.

Have you ever tried to see exactly what stocks are in your mutual fund? Trying to get that information from your mutual fund advisor is tough. They often only publish it at the end of the quarter. And frequently they are involved in what is called “window dressing” They will buy some of the hot stocks that quarter at the end of the quarter to show you “hey we have this stock” Not so with Natural Gas ETFs. You know exactly what stocks are in your ETF. You know exactly how many contracts the Natural Gas futures ETF has EVERYDAY.

Natural Gas ETFs are less volatile than individual stocks.

If you invest in an individual natural gas stock, you are subject to possible bad news coming out about the company. Maybe one of their gas fields is having problems. Are you able to pick out the best natural gas stock to trade? With an ETF you will have a basket of stocks to help guard against any one stock from destroying your portfolio.

You can trade Natural Gas ETFs all day

When you trade a natural gas index mutual fund, what is the ONLY price you can get for it? The answer is the closing price of the day. There is no way to trade a mutual fund intraday. You’re at the mercy off buying or selling at the final price of the day. By trading a natural gas ETF, you can trade it intraday. You are free to try and “scalp” the market, react to news during the day. You can set price points to trade around during the day with an ETF. An index mutual fund does allow that.

Think the price of Natural Gas is going down? You can Short Natural Gas ETFs

That’s right. Do you think demand will be low this winter? Maybe this will be a warmer winter and you expect the price of natural gas to go down. You are able to short (sell) Natural Gas ETFs betting on the price of natural gas to go down. You’re not able to do that with mutual funds.

Add Natural Gas ETFs to balance your portfolio

With the current economic situation, with the possibility of inflation coming back, you can add a natural gas ETF to you portfolio as a hedge against inflation.

Natural Gas ETFs can be charted and analyzed using technical analysis.

Do you like to use price charts to trade the markets? Perhaps using moving average crossovers or Bollinger bands to discover a new trend. Since Natural Gas ETFs trade like a stock, you can use your favorite charting tools to trade the ETF.

Now you have learned the benefits of using the various Natural Gas ETFs that are available. Do a little more research and start trading now!

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
• Natural Gas ETF frequently asked questions (FAQ)

Why would I purchase a Natural Gas ETF when I can buy a natural gas index mutual fund?

You certainly can buy a gas mutual fund from a fund family. But the annual management fees of doing so will be more expensive than the management fees of an ETF. Plus if you trade a natural gas index fund, you will only be able to buy and sell at the closing price at the end of the day. What if some news come out that you think will cause natural gas prices to rally? If you buy an index fund, most of the move will be made that day while you’re sitting on the side waiting to buy at the end of the day. Better to be able to react immediately and buy instead of watching other people make money.

Can Natural Gas ETF beat the market?

Natural Gas ETF provide an easy way for an investor to trade various segments of natural gas. There are gas ETFs that mirror the natural gas futures market and there are Natural Gas ETFs that attempt to follow the prices of various gas exploration companies for example. Those ETFs take a basket of stocks to give you diversified holdings in natural gas.

How and where do I buy them?

You can buy or sell them as you would any stock at your brokerage firm. Don’t have an account to trade stock? You can visit Sharebuilder and buy ETFs for $4 to open an account with as little as $0. Thats right, there is NO minimum amount to open an account. Visit the site for more  details.

ETF’s are they insured?

ETF’s are tightly regulated by the Securities and Exchange Commission (also known as the S.E.C.) The S.E.C. examines each ETF that is created and brought to market. The Depository Trust Clearing Corporation is in charge of the clearing of trades. Their job is to ensure that the stock certificates involved in each trade settle in the proper stock account each night.

As in any stock, there are underlying risks involved. That is up to you the trader if the risk profile matches yours. You are ultimately responsible for your trading decisions.

Why not just buy individual Natural Gas Stocks?

You can, but most investors prefer to be diversified when they invest. Depending on the size of your investment portfolio, you will not get the diversification that you need. You may be only to purchase a few stocks but with a Natural Gas ETF you can buy several for the same amount of investment. Plus if you traded say the United States Natural Gas Fund, you get to trade NYMEX natural gas futures without opening a futures account or exposing yourself to that much more risk. You could buy a few shares instead of having to put up the margin to trade the natural gas futures.

Are there ETFs for Propane?

Despite the demand and usage of propane gas, there are currently no propane gas ETFs at the present time.

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.