Natural Gas ETF Investing

Winter is here again and consumers are worried about the direction of energy prices this year. Will this be the year of a constant artic blast, thereby increasing energy demand, or will it be a mild winter. You certainly keep an eye on energy costs so you can save money, but you can also look at energy cost as a way to make money.

Constant movement in energy prices can give an investor plenty of investment opportunities to earn a profit. What you need to do is to focus on an energy sector, then find the best investment vehicle in that sector.

If you like to follow natural gas, there are many ways to trade the swings of natural prices. Perhaps the easiest way is to trade the Natural Gas ETF. A Natural Gas ETF is like a mutual fund. ETF is an acronym for Exchange Traded Funds.

Natural Gas ETFs are typically made up of a basket of stocks. Some of these ETFs follow natural gas producers. Other gas ETFs will track natural gas drillers and storage facilities. Still other will invest in the direction of natural gas futures traded on the New York Mercantile Exchange.

Trading an ETF is easy. This is the main difference between mutual funds and ETFs. Exchange Traded Funds are traded all day long while the stock market is open. When you trade mutual funds, whether you buy or sell a mutual fund, you will only receive the closing net asset value of that day. With an ETF, you can trade it like a stock all day long.

It is possible to day trade Natural Gas ETFs.

This gives you a huge advantage over mutual funds. Let’s say you hear on the news that there is a shortage in natural gas injections that week due to rising demand. If you trade a Natural gas ETF, you could react immediately and put a trade on. If you only traded a natural gas mutual fund, you can only buy at the closing net asset value for that day.

You can trade an ETF just like a stock. You can enter market orders, stop loss orders and GTC orders. You can also chart it like a stock. If you have a short-term theory of trading you could be charting it with 5-minute charts. Commissions are also cheap; you can use an online broker and generally trade for less than $10 in commissions.

If you have an opinion on energy prices this winter, you may want to investigate Natural Gas ETFs further.