What is US natural gas?
Natural gas or fossil gas is a form of fossil fuel composed primarily of methane along with a mixture of components such as natural gas liquids, carbon dioxide, ethane, propane, water vapour as well as other elements. It is widely used in different activities because it is one of the most environmentally friendly and cleanest fossil fuels. The natural gas fuel is commonly used for generating electricity, for heating or as a subsidy for gasoline fuel for vehicles.
Natural gas can be found on land, offshore or under the ocean floor in between rocks or sedimentary rocks, shale, in oil fields or coal deposits. Depending on the formations where the natural gas is extracted, the gas can be referred to as conventional and unconventional natural gas or if it is found along with deposits of crude oil then it is labelled as associated natural gas. The process of finding and collecting is performed by drilling natural gas wells after which it is processed into usable clean fuel.
As it is the case with other commodities, the value of natural gas is also under the influence from supply and demand levels and factors such as economic conditions, political situations, available reserves, the discovery of green substitutes and the value of other fuels.
Natural gas as a commodity can be traded on exchanges such as the New York Mercantile Exchange (NYMEX) or the Intercontinental Exchange (ICE).
Past movements of US natural gas price
Natural gas has a broad application in everyday lives and a significant role in the economy. Its value is affected by different factors. Demand and supply depend on seasonality and also the value of natural gas moves in the same direction as oil and other fossil fuels. Accordingly, natural gas has high volatility, which makes it an attractive commodity for trading. Since 2016, the natural gas had the highest price of nearly $4.8 (£3.88) in November 2018, though it fell in March 2020 when it was priced at $1.6 (£1.29). It can be seen from the price chart that on a daily basis, the natural gas price has the potential to fluctuate even 5 per cent or more.
Because of its seasonality, the natural gas value tends to increase during winter periods while it is lower during the hotter seasons.
The significant decrease in value from the fourth quarter of 2019, which continued in 2020, was the result of numerous factors. The coronavirus outbreak has decreased global economic activity, which has resulted in lower demand for natural gas.
Also, the oil price on the commodities markets was hit hard and the oil has been much cheaper in the first quarter of 2020 compared to 2019.
How to invest in natural gas
Natural gas volatility means that you can profit from the price movements if you have a suitable strategy and select an adequate instrument. Derivative instruments are one way through which you can invest in natural gas. You need to select the futures available on the exchanges and buy the contract to cover your desired position. You can also generate profits by trading natural gas options. Anticipation of price increase means that you need to own a call option.
However, these types of derivative instruments can be difficult especially for newbie traders because they need to pay attention to aspects such as delivery date, delivery price, contract’s value, contract price, contract’s size and so on. Beginners may get frustrated and be under the impression that natural gas trading is complex.
Another way to invest in natural gas is purchasing units from mutual funds related to the commodity. However, this comes with specific service fees while early closure of your positions may create additional costs and also the profit may be limited because of conservative investing.
The drawbacks of the other trading instruments are overcome with the tokenised commodities offered by Currency.com’s leveraged trading platform. This means that Currency.com has employed the advances in blockchain technology to create tokens for real assets with which you can profit from price movements of an asset even though you don't own it. The technology used by Currency.com makes the process of recording transactions and data and executing trades much easier, swifter and less expensive. So, unlike the other types of instruments listed previously, all you need to do to open a position with tokenised US natural gas is to define whether you will speculate on price increase or price decline.
Besides, Currency.com offers the possibility for cryptocurrency owners to trade tokenised assets with crypto without the need to exchange them. The trading process becomes even more appealing because traders can focus their resources on developing a winning strategy instead of struggling with complex instruments.
Take into account the opportunity to augment your profits with the margin offered by the Currency.com trading platform. Among other things, under everyday circumstances, your profit is bound by the amount of capital you invest and the price movement.
However, even a substantial price movement of 10 per cent may provide a small profit if you have limited capital. Currency.com has eliminated this drawback for traders by giving them a margin for trading tokenised assets and you can trade tokenised US natural gas with a margin as low as 0.5 per cent. Stated differently, a position worth $25,000 (£20,182) would require you to have only $125 (£101) of capital. Hence, a 1 per cent move in the price can bring you a profit of $250 (£202) due to the margin provided by Currency.com. For comparison, if you invest only your capital of $125 then even with a 10 per cent move you stand to gain a small profit of $12.5 (£10).
Tokenised natural gas trading guide
The process of trading tokenised US natural gas is relatively easy to understand. You need to finish a couple of basic steps, which are:
- Step 1: Complete the two-factor authentication security (2FA) implemented by Currency.com to create an account on the leveraged trading platform.
- Step 2: Allocate capital to your account. You can select to trade with Bitcoin or Ethereum or you can add fiat money.
- Step 3: Determine the position's value and estimate the capital you will need based on the 0.5 per cent margin provided by Currency.com.
- Step 4: Use your trading strategy to identify the potential price movements and open the relevant position (long or short) with tokenised US natural gas.
- Step 5: In this step the platform connects the opposite orders between its clients and Currency.com will further link the free orders using Capital.com, LMAX Digital or Binance, Bitstamp, Kraken, NASDAQ, NYSE and Gain Capital.
- Step 6: Define when you would like to close your positions and collect your profits. One of the options available on Currency.com trading platform is to set take profit orders.
Why trade tokenised Natural gas with Currency.com?
Natural gas trading at Currency.com tokenised assets exchange has a number of advantages. Tokenised assets are underpinned by robust and immutable blockchain technology. Opening a trade will give you a token that tracks and moves according to the underlying instrument's price.
- One-stop crypto trading platform
Trade tokenised natural gas with Bitcoin or Ethereum. Benefit from the commodity's price movements without turning your crypto assets into fiat.
Trade tokenised natural gas with a tight market spread, benefit from maker rebates and competitive taker fees.
Experienced traders can trade the world's top markets, like natural gas, with up to 1:200 leverage.
- Effective risk management
Manage your risks and secure your profits with stop loss and take profit orders. Save your assets with negative balance protection.
Currency.com has a scalable and low latency order management system, which can execute 50 million trades per second.
Currency.com operates under new Belarusian regulation with best-in-class AML and KYC laws. Regulatory details and fees are upfront.