UGAZ price swings AND small size trading strategy

UGAZ price swings AND small size trading strategy


hello welcome back to taking trades what looks like natural gas futures have hit a support level that we discussed in yesterday’s video and I want you to jump down the comments real quick let me know how you traded this drop in price action so in today’s episode I’m going to show you a screenshot of how the colder weather is progressively moving south then I’m gonna break down the charts regarding today’s price action on natural gas you gas Andy gasps and then at the end of this video if you stay tuned I’m gonna show you one of my stocks that I trade and how I buy the dips and add small size to my position for a longer-term growth this small size strategy is super simple and helps me manage the ups and downs when trying to build a position let’s begin [Music] so first off I want to thank Matt gasps weather.com for this beautiful graphic of the progressing arctic blast you can see the super cold temps are now dumping down into Texas and spreading further east when compared to yesterday’s graphic now naturally this is going to kick up demand and natural gas and the question becomes will this affect gas prices or has the cold weather already been priced in more experienced futures traders tell me that what matters is the 7 to 14 day forecast so I want to show you that right now on that gas weather calm okay so we’ve got nat gas weather calm the 15 day low temperature forecast and the way that I find this is I just come over here to the weather maps you can go to the 15 day highs or 15 day lows and I’ve got the 15 day lows up right now and then what it does is it kind of walks you through day one through day 15 so I just wanted to show those to you real quick and you can see that our demand right now is very high and this is through November 12th through the 18th so this is working out through this week and into the weekend but the question becomes you know what price action and weather what combination is baked into natural gas right now and if we’re looking at the next few days like I just showed you that weather map that may already be baked in and what we have to look at is the next seven to 15 days which is what we’ll do here so if you just look at day one here we’ve got low temps you can kind of see the cluster in here and then you can kind of see where temperatures are easing and how in the southeast were warm and the Southwest were warm and then as I kind of scroll through these you can see how we do get some flushing out we get the warmer weather moving further southeast colder temps coming in Midwest is getting hit a little bit and then as we progress you can see it then turning and moving up into the Northeast Florida looks like it’s warming a little bit further up but overall the temperatures are down a little bit from 79 to 72 and then you can see it’s a little modeled in the southwest we go to day four things are getting pushed further you still have this green band along the coast it’s still modeled little warm areas in the southwest and then some easing in that deep chill area in the Midwest and kind of up here in the north near the Canadian border so easing a little bit then you see that cold purple retreating up to the Great Lakes and up into the northern part of New York and up into the northern part of Maine and then as we keep pushing through we’re getting almost a week out that cold purple blob is now moving off to the northeast here it is that’s all that’s left of it a little bit of purple here up in the western side of Wyoming and then we keep pushing down we’re getting a little more modeled warmer temperature into California and through the southwest but you can see Florida still holding in those low 70s and you’re still getting a little green band of warmth along the coast which typically is expected and then we keep progressing out to day eight we’re getting some colder temps but it’s kind of up where that blob went back into Canada come back out to day nine and it’s nice because you can just kind of see the progression of how things are working how things are going cold up here but a little bit of easing down through this this little band right in through here and then the South is staying in the 50s but then you can see Florida dipping down into the high 60s which is a little colder than in the previous view slides back to 73 for Florida sort of some more the same you can see a little purple in northern Maine we go out through day 11 if you still see this band through here we’re getting cold on this side cold on this side and then this little band of a couple little warm pockets if you want to call them that but then Florida back to 75 still a little warmth here in the southwest we move through now we’re getting a little more green through Texas a little more warming up through here and then Florida is 70s to low to upper 60s and then we just keep pushing out but it’s just overall kind of settling into more the same a lot of in the 30s for the lows and so what that would mean comparative to right now is this is almost showing that we’re going to get a little bit warmer over the next seven to fourteen days then we would be if we go back to day one right now we’re getting that deep chill so it’s interesting because we have the deep chill now which makes people think oh we’re gonna turn on natural gas there should be more demand which is true but I have a feeling like some of this temperatures may be baked in and now that we’re looking out 14 days on the horizon we’re seeing things kind of just stabilizing still cool people are still using their heaters but it’s not a hard-hitting cold blast right now that we’re seeing within these 14 days because we go back to the day 14 and 15 you know it’s eased up these really really chilly areas are now getting their lows into right around freezing or even just a little above freezing for most of the United States with that let’s jump over to the charts and break down today’s price action on you gas and D gas right natural gas futures December 2019 we’ve got the daily timeframe up and I’ve got all our lines and our blobs and everything here for us to take a peek and I just want to break down the price action going on today and then reference yesterday’s video and talk about how things are kind of playing out so as you see we had that push up we got rejected off there then as we started to settle in here we got kind of into a support level or a buying zone then we gap down hard and just sold off we blew right through the bottom of the gap which was down here at that 2.7 area and we came crashing all the way down and remember we talked about yesterday that if we broke down through this level we could possibly see some more support at the 50 simple moving average and the 20 simple moving average now they’ve come together which in my experience makes them a little stronger when they’re together and you can see that this wick stopped right on top of that and then backed off it so it showed a little respect for the support then today we opened up and we’ve been up and down and back and we’ve celled him right on top of the 50 and 20 simple moving averages so this makes me very encouraged that there could be the possibility of more upside coming if this support level holds now we talked before if it does break down even further then I’m gonna draw a line here and this could represent the possibility of where the next support level could possibly be and again just my opinion but it sort of looks like we could be in this area and let me go ahead and adjust that look I’m just gonna make it solid right in this area which seems to be right around that 2.52 area this could be or even maybe just above that 2.55 this looks like a possible next support level if we were to break down below these simple moving averages so right now we’re dojin big time got a nice tall wick nice lower wick and then we’ve got this tiny little doji body which is showing slowing and selling and slowing and buying because we’ve been both directions right now now we’re settling it on top and then tomorrow if we start to get price action moving back to the upside that would be a very bullish sign but if we gapped down and get below these moving averages that would be very bearish that would be bullish for digas however and then I’m thinking that the next support level would possibly be right around this 2.55 area so we would be watching for that if we do get that break back above into the channel and we stay above this channel bottom there’s a very good likelihood that we would move up at least to the 200 simple moving average and we look for resistance there followed by resistance here at the 2.78 ish level right in here and then beyond that being here at the 2.85 is our next resistance so resistance 1 resistance 2 resistance 3 resistance 4 there’s our 4 levels there and then we’ve got support 1 and support 2 so two support levels look at what I’m looking at right now and for overhead resistance levels so you’ll see how things play out we’ll watch things again tomorrow and I’ll check in with you guys on price action again in the morning so now whatever they want to do is jump from this over to you get and take a peek at this one as well so we’ve got our lines drawn and this is a little more confusing because just not as much price action as the futures market but you can see below we draw our support level so we’ve got one support level below us we’re setting on the 20 that looks like it’s holding support but the issue with you guys right now is we’re below 250 like we had talked about yesterday so we’ve got resistance here we’ve got resistance from this zone that we talked about the other day and then we’ve got resistance from the 200 and we could possibly have resistance from the top where this turned around and go back down so we’ve got 1 2 3 3 4 5 possibly 5 overhead resistant zones or sticking points to work through and we have one two support levels so the 20 is holding right now it’d be nice if we could get above the 50 and hold there and then work our way back up through this channel but for right now we’ve got more resistance above us than below us but we do have two support levels that we can look to possibly add small share size to if that’s what you think is right for your trades now if we look at D gas D gas is showing that big pop-up it cleared that channel and now it’s settling right in here so we’ve looked we’re looking like we’re getting support off the top of the channel right in here and we’ve got resistance points here and here so those are one two and then we also had a line up here so three so it looks like three decent resistance levels above and one two and possibly three right in here support areas below so I like how this is setting up on top of the top of the channel if that’s enough to hold with respect to the natural gas futures market then it could possibly work further to the downside which would not be as good for you gas but good for D gas so just to give us one last reference on natural gas we’ll just peak over here real quick and you can see there’s our channel we’re below it but we’re setting up on a nice support level right here we’ll see if it holds if it does I’m looking for a push back up into this area where I could possibly take profits if I were holding you guys shares and wanted to trim a little just because we’re add on overhead consistent so always good to take a little profit at resistance zones and trying to add back to your position at support zones if that’s what’s appropriate for your trades so with natural gas wrapped up I want to show you a live example of one of my trades I mentioned this earlier I wanted to go ahead and jump into this and show you how I add small size to my position in order to build a long term position in my portfolio or a position of a sheer size of a hundred so that you could sell options contracts against it against it so let’s jump over real quick I just want to take a quick second just to remind you guys not to ever take a trade based solely on my opinion this channel is all about my opinions and what I like to do in the markets and I like to show you examples of my trades but I also like to just talk about the markets in general so breaking down a stock or ETF or etn doesn’t mean that I’m buying or selling that stock ETF for ETN it’s just my analysis of my opinion on what the price action is doing combined with weather and news that’s currently happening surrounding that commodity or security so just keep that in mind when watching these videos alright let’s jump back into it and the stock I’m referring to is actually Facebook and you can see I’m just gonna show you what I’ve been up to on this and you can see in here that back in August if I highlight so just so you guys know on thinkorswim if you turn your trades on it puts these bubbles in and it shows you where you’ve bought so any green blob is a buy any red blob is a sell I currently don’t have any any red blobs on here right now but so if you go back to here and it looks like August 28th I saw price action trickling down and I saw that head had touched a couple of times in this area so it was setting up sort of a line right across here and so I went ahead and I bought five shares at 180 150 and then I just held it and I watched it and it pushed up and as long as it was pushing up I’m just leaving it alone I’m just along for the ride and I was a green on the trade so I’m just gonna let it go but then we got this pullback and the pullback came down and touched this twenty simple moving average now I’m always talking about simple moving averages and how I like to add small size to my positions when I hit those areas of support I considered this an area of support because the tail touched it and then price action moved away from it it respected that that level so I went ahead and I added ten more shares at one eighty five thirteen so I’m getting my cost basis set up nicely I’m kind of getting snuggled into the position we got a push up higher pullback pushed up higher I thought okay if this breaks out I’m gonna leave it alone and see what happens but we sort of triple top one two three and then sold off hard now in this hard sell-off we are back below these levels this is an over exaggerated day so I went ahead and I added thirty-five shares at 180 220 then we had a green day if I don’t came maybe we’ll bounce back up but we didn’t we dropped again I bought 25 more here we dropped again and then we showed a doji during this day it was doji and I thought maybe this would be the bottom and now we’ll start to move higher so went ahead and I added 25 more we got a quick drop I liked that I was just above the 200 simple moving average because that axis support and I liked that the 200 simple moving average was moving across the screen from left to right moving upward showing bullish sentiment we didn’t get the bounce we dropped again and then quickly recovered I didn’t add here because I was gonna watch to see if it was gonna go lower but then we got a surprise big green day then it started working its way up and I just didn’t think about I just left it alone in hindsight during this drop down into the SMAS again would have been a good ad but I didn’t get popped pullback popped pulled back popped and then is it pulled back in here it just sort of bit started to hang on the 20 again so I added five more shares and said I’m gonna watch and see what happens then we had a doji and this day was very exciting in here because what happened was it dropped then by the end of the minute by the end of the day it pulled back up and it’s sack right on the 20 in this beautiful bullish doji and I said perfect we got a little hammer candle I’m gonna add five more and today is it opened I added the five more and then we got a nice push up away from that level so I’m just adding small size whenever we get pullbacks and dips and things just so that I can be comfortable with my cost basis so if I open up my active trader I can show you guys that I’m wrong right now a hundred and ten shares on Facebook with an average cost basis of 181 56 now in addition to this what I’ve been doing and you’ll see this this number down here what I’ve been doing is now that I have a hundred shares of it I can sell one cash secured cash covered call and that’s an options contract so you have to sell options contracts in share size of hundred shares at a time that’s one contract so I’ve been repeatedly selling cash covered calls on this position and because of that I get paid per share if the contract expires worthless and so I went ahead and I’ve been doing that since I’ve entered this position since I’ve accumulated 100 shares and what that’s done for me is my average price is 181 56 but because I’ve been selling cash covered calls and getting paid premium it’s pushed my break-even point down to 170 for 45 in that area so right now if as long as I stayed above 175 if I’m in the green my breakeven would be all the way down here so it helps as price moves up and you sell cash covered calls it moves price down so they start they sort of separate from each other as you go you’re not just stuck at 180 156 forever you can actually keep dropping your break-even point by selling options premium and in my case cash covered calls so I thought you guys will find this interesting I just wanted to show you one of my trades show you an example of how I buy the dips how I adds small size to my position and don’t worry I’m not gonna say the word nibble anymore everybody made it clear they don’t want to hear the word so adding small size to my position this is what I’ve done this is a perfect example of how I do that and what I’ve been talking about in reference to you guys when I was saying buying small small pieces so that when you do get the big drops like for example on this day this huge drop that would scare the heck out of me if I would have just bought a thousand shares here but I didn’t I was only 15 shares long so to get a big drop like that is a buying opportunity it’s a signal to me to say okay we just got a discount I’m gonna add a little bit and it doesn’t mean that I add a thousand shares here it just means that I add a little bit and I added 35 because then I got this green push and then we fell again you don’t know where you’re gonna end up falling but the long game being that if you’re looking at quality companies or you’re looking at commodities that are very popular and that are profitable and moving in the right direction and have demand then you can go ahead and you can get comfortable in a position by limping in I like to say limping because it’s just little bits of shares and you have to exercise a lot of patience when you’re doing this because if you don’t and you just jump in too quickly you could be a thousand shares long right here at 186 and then what are you thinking when you’re down here at 174 with a thousand shares long you’re gonna be hurting really bad so you have to make sure that you’re keeping your share size small and this strategy just allows me to not feel the pain because I could buy five shares and wait a month buy five shares and wait a month I take so much time when I do this that when I get presented with the situations where I get a discount I always have reserve funds because I’ve been buying very small so see if this helps you guys it’s really helped me if you have questions about my small sizing strategy just let me know it’s a pretty basic thing that a lot of people do but it just helps you not irrationally jump into the market because I’ve had these situations in the past where I’ve bought larger size and then the next day a news article comes out and a stock drops heavily well if you only had bought five or ten shares you don’t really care about that news article you just say oh it’s a discount I’m gonna buy a few more share and then your cost basis dropped significantly if you still like the company so hope this was valuable hope you guys are green leave questions below and we’ll see you tomorrow [Music]

34 Comments

  • JamesSmalleys Lifes Advertures

    November 12, 2019

    Watching and learning

    Reply
  • Rich Maker

    November 12, 2019

    will the price go down to fill the 2019.10.28's gap?

    Reply
  • Jonathan Gant

    November 12, 2019

    Perfect , great weather forecast my funds should be settling before the deep chill ….

    Reply
  • Mark Is the One

    November 12, 2019

    Sold DGAZ at 114 and bought smaller position on UGAZ at 15.19

    Reply
  • J A

    November 12, 2019

    I didn't buy ugaz or dgaz today. tomorrow will be different . I did short HTZ $$$$$$

    Reply
  • Khalid Ramji

    November 12, 2019

    Hey Jimmy! Do you do cash covered calls for UGAZ as well? I tried purchasing nat gas options but my account doesn’t allow me to do so.

    Reply
  • keith

    November 12, 2019

    It's 40 degrees in Atlanta, which is very cold for this state. I know it's much colder in other states and people have to be using more gas for heating.
    Can you please explain why the price of ugaz is going down even though the temperature's are very cold and people are using more gas? I'm frustrated because I'm losing money and I don't understand why this is happening. Thanks.

    Reply
  • Ksenia Asatryan

    November 12, 2019

    Will add to my UGAZ long.

    Reply
  • james kenyon

    November 12, 2019

    Holding 2000 shares of Ugaz at 18:50 expecting a gap up with arctic weather. ….

    Reply
  • ray

    November 12, 2019

    Hi Jimmy, do you trade UGAZ and TVIX? Will Buying small amount work on this?

    Reply
  • protegeteam

    November 12, 2019

    Jimmy has a new career as a meteorologist

    Reply
  • n00balisk

    November 12, 2019

    I'm feeling a bit of pain. In ugaz @ 16.80 with 1500 shares.

    Reply
  • Tawnya Mullen

    November 12, 2019

    I bought way high…and sold waaaay down. Hoping to not repeat that one 🤦‍♀️

    Reply
  • Reid May

    November 12, 2019

    Will UGAZ hit $20 again this year? Opinions?

    Reply
  • Karolina Borkowski

    November 12, 2019

    Well I held it and cried… I really need to up my shorting game 😆. I’m fine… just annoyed

    Reply
  • Nomad Trader

    November 12, 2019

    Remember we have over a month until winter… it's the middle of fall. Thursday might be a nice surprise.

    Reply
  • Flaming Profits! STOCK MARKET INVESTING

    November 12, 2019

    I have 777 shares @ 20.81 sucks to bag hold, only reason I didn't sell was because PDT rule wouldn't let me… Next time I'll make sure I'll have $25,000 in my account…

    Reply
  • Infinite

    November 12, 2019

    Thanks for the video man! Sold my DGAZ today and bought a few UGAZ but probably won't be a long hold. Loved the live example you showed. Can you consider making a video on trading options? To a new trader it seems quite confusing.

    Reply
  • Rick Byrnes

    November 12, 2019

    At about 1:15ET today out of nowhere NG took a plunge. Was there news or some report issued at that time?

    Reply
  • Drake Parker

    November 12, 2019

    I'll be adding shares if UGAZ goes below 15 tomorrow. Hoping Thursday's report is promising!

    Reply
  • Select Start

    November 12, 2019

    I’m new to UGAZ but what’s your experience about how high this may go during the winter months

    Reply
  • First Last

    November 12, 2019

    Hi Jimmy,

    I really appreciate the clarity of your explanations. Can I suggest you do an option video for beginners at least once a week or as you grow your channel . I don’t know how much time you have to edit your videos but it will certainly will help with diversification of your videos..

    Didn’t forget to hit the like button 😂. It’s engrained In my head now.

    Reply
  • Satoshi Gerbil

    November 12, 2019

    can you make a video about options. The basics at least

    Reply
  • Zaheer Shaw

    November 12, 2019

    Nibble sounds just fine Jimmy haha. Thanks for the update!

    Reply
  • Abe Castillo

    November 12, 2019

    Today was the coldest morning of the year here in Texas. Next week low is supposed to be around the 50s so idk about a pop in ugaz anytime soon 😕

    Reply
  • Dan

    November 12, 2019

    Thx!! Regarding your strategy on Facebook, how did you know what was a nibbling opportunity, as opposed to simply a downtrend, I guess in other words where was your stop on that trade and how did you determine where that would be / that the trade simply wasn’t going to come back up…? Thanks

    Reply
  • E G

    November 13, 2019

    Buying dips here Jimmy. Small blocks is key, another sidenote on this polar air dump, when temperatures on NG production fields reach freezing or below freeze offs occur in regards to production. This happens when the water and other liquids on drilling rigs freeze,making drilling unsafe. Currently nationwide we are losing 1.5 to 2 Bcf of NG production per day due to freezing temps. What does that mean? Next weeks NG report will be a doosy. I see top end right now to be about $2.98 NG price. A look at the month chart is showing a potential for forming a head and shoulders pattern. I suspect a pop to about $17 this week on UGAZ on the draw for the EIA report and then NG will do one of two things, bound from there and work its way up again resuming the rally, or complete the head,and shoulders pattern and retreat to about $13.20 (UGAZ). Jimmy would likw to hear your thoughts on the chart. Thanks again for your work, Sunday should be a make or,break for this as the weather model will update again.

    Reply
  • T

    November 13, 2019

    Bought in too high still holding..having doubts..😔 about If we'll ever get to 22.

    Reply
  • jonnken

    November 13, 2019

    It's much better to base all support and resistance…only from the futures charts. 3x ETNs have exposure to options price time decay which continually discounts their Net Asset Values. Using time based indicators like moving averages …on 3x ETNs just adds noiser less reliable data.

    Reply
  • Michele Holley

    November 13, 2019

    Breath in, breath out. Blue is blue. It is winter, it will last awhile. People will use NG. Buy low. Sell high.

    Reply
  • huckn barry

    November 13, 2019

    Sold 1/3 Friday and 2/3 asap Monday pre market and am just observing for now . Bought fcel at .2995 and jcp at .89 and happily observing them.

    Reply
  • Rio The Hitman

    November 13, 2019

    I like when you say nibble lol

    Reply
  • chosen_one1

    November 13, 2019

    UGAZ got me crying like a baby teething.

    Reply
  • Gray Goose

    November 13, 2019

    Your strategy is similar to mine, and I agree that you should "limp" your way into an entry point, so your not hurting when your bag holding. I like it.

    Reply

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