So folks, today, we're going to be talking about some of the biggest secrets when it comes to trading natural gas and earning consistent income from trading natural gas. Because at the end of the day we're trying to make money, folks. But one profitable trade doesn't mean anything if you lose it on the next one. So it's all about consistency in the long run.

And today we're going to be talking about some of the secrets to help you become consistent. And for those of you who don't know. about a week ago I made a video on my complete tutorial on how to trade natural gas in 2020 and then I went through my step-by-step process on evaluating supply and demand and a bunch of other things to be consistent with it. Now Trading Natural gas is actually quite fun because there are several concrete variable factors: I Always talk about a system of elevating and deprecating factors and the reason is because if you could stack your elevating factors and how way your deprecating factors, it pushed the long term odds more in your favor.

But this video is centered around developing your powerful edge for trading natural gas. But before we get into it, you know that a lot of work goes into making a video like this and the only thing that I ask of you in return is that you hit that ravishing like button Warm, that ravishing like button with the natural gas that we're going to be talking about in this video. So let's go ahead and unbutton this video and talk about some of the biggest secrets that you need to know. There are about five very specific and fundamental catalysts that affect natural gas prices.

A big one one that everybody knows is weather. Now colder months are going to often correlate with more natural gas use and higher natural gas prices. Thus, in the month that are leading up to expected cold months, you're going to see more upward direction and anticipation. And this shows.

When we're looking at the previous price action and this has to do with increased demand and increase the man leads to higher prices. If supply stays the same, this is Supply and Demand 101. It's pretty simple if you have less of slept-in and more demand all of a sudden the prices go up and vice-versa And the supply measurement which I covered in the last video is the storage right how much natural gas we're storing to the way that it works is that we store natural gas throughout the year and then all of a sudden during certain months we're liquidating it. We're taking more of it out.

I Don't think liquidating is the right word here, but we're taking the natural gas out of storage. and the less natural gas we have in storage, the less supply we have, right? And that pushes the price up. If we have more demand in cohesion with that, the less storage there is, the more expensive prices are going to be for each level of demand. But there are other factors and some things that people don't think of.

For example, increase the economic growth is a huge bullish sign for natural gas. Say if you have economic growth in sectors that use and rely on natural gas, that means they're going to demand more and thus increase the overall price for said natural gas because they're demanding more of the same supply. But how do I know this? How do I know that there's a positive correlation between high natural gas prices and higher economic growth? Well, if you look at the data from 1950 to 2018, we could see that as economic growth has increased, natural gas consumption has as well. And you could say, well, hey, Charlie hi, no statistics and I know that you can't just combine two things and say they're correlated well.

that's true, But even in the short term, just comparing the S&P 500 to natural gas prices shows some positive correlation and it makes sense. Put simply, a Green Day in the overall market is more likely to result in a Green Day In natural gas prices. It's not perfectly correlated, but it tends to correlate. It makes sense because more economic growth means more consumption.

You need to make more products, offer more services, and provide more heat. All of a sudden, you need more natural gas to do those things. But I should also note that higher consumption doesn't necessarily mean higher prices for natural gas if production outweighs if the growth of production outweighs the pace of the growth of consumption. All of a sudden, you're in this area where prices are still going down.

But it's important to know this so that you understand the direction for natural gas on any given day in terms of the different motivating factors. And hey, this is all good in theory. And you might say, but Charlie How do I use this to grow my account? Because you could talk about theories all day and if you don't know how to apply the theories, then they're not really helpful, right? It's just another piece of information that you throw out like a dog. So what the correlation in mind? We now know that slowing or growing in certain sectors will have a overall correlation to natural gas predictions and thus have a reactive effect on the price.

For example, reports of economic slowdowns in China might mean a slowing down of natural gas demand and thus less exports from the U.s. to China. This could then mean that we have more supply in the US and less demand overall, creating a negative pressure on the price. An example of a positive catalyst would perhaps be a reversal in the manufacturing sector.

You see, manufacturing these days now uses more natural gas than ever, and if manufacturing goes up, that means more demand for natural gas. Moreover, industrial companies are more often using natural gas as well as the farming industry for their fertilizer. They put natural gas and fertilizers so of Agriculture's bullish. All sudden, we have a positive pressure on the price because they're demanding more.

Okay, so the next thing to keep in mind is crude oil price fluctuations. Now, the correlation here is debated by a lot of economists and a lot of different people. But we're not economists, we're traders, and we just need to find some sort of correlation so that we have an elevating factor to push the odds bore in our favor or against us. And if you look at both prices, you can see intuitively that there is some apparent correlation.

That's partly because an increase in natural gas for crude oil can increase the cost of production, which in turn increases the price of natural gas refined along with it. That's just the way that it's produced in some cases, and in many cases, in thus, it creates a positive correlation. A lot of the perceived correlation that we see here is due to the fact that increases in use happen around economic growth periods. Like we mentioned earlier, if you have more economic growth and you have more production, it doesn't just increase the price of natural gas, but also crude oil.

And in the cases where there are alternatives for one another, all of a sudden, you have people flocking to the one that's cheaper. So that's why it's a loose correlation, But there is correlation there. and in terms of actually looking and digging into the correlation, you can see crude oil has fluctuated quite a bit more. But when looking at the chart, you can see they both started relatively higher.

dropped, peaked higher dropped, and then started growing higher. Very similar. There's just a little bit more fluctuation in one versus the other. Okay, but going further, what are some of the secrets on how to actually trade natural gas? You gas and Digas are leveraged ETF and it comes to actually looking at the chart.

Or remember, we have two options. You guys. and Dee Guess one is the inverse of the other. Very simple stuff.

Very elementary. but since we have two, we need to figure out which one we're going to trade and how do you do that? Well, You identify which one is in an upward direction and it's actually quite easy to do that. All you need to do is look to see which is trading above the directional red SMA line. If it's above the red directional estimate line, it's in an upward direction and if it's below it downward direction.

So here we are trading in an upward direction. Here we are trading in a downward direction, so on, and so forth. But here's a further tip: identifying a clear trading channel can be a huge benefit. One of the struggles folks often have is not just picking a clear direction to trade, but also understanding where the best places are to actually execute into a position.

How many times have you executed into a position and it just didn't go anywhere many times? folks. So I could say that you should just wait for confirmation. But the secret is if you want a good confirmation point and you don't want to to be watching the chart all day, you need to find confirmation points that are in an interval at which has been repeating. And one of the ways to do this is by drawing a trading channel that allows you to measure the strength of your price action relative to the other price action in the channel.

Now, hindsight bias makes this channel look more powerful in theory, but the channel is still there regardless of hindsight bias. If you're in the middle of the channel, the key is to find areas, identify areas where the price action tends to fail, tends to reject a breakout, and then returns back to the middle of the channel. If you can do this, you can have a pretty good go at it. And of course I have a 30 minute lesson on trading channels and how to set them up as well as the rules regarding them and how to twist price action into your favor On Zip Trader You But for the purposes of this video, understand that trading channels are a very powerful tool to boost your consistency and odds of success Overall, because trading is a probability game.

but another tip I want to give you is to understand what it means to have clean price action. We like trading on clean price action. Put simply, friends don't let friends trade dirty Price action. A lot of folks get confused in stock when it comes to picking time periods and aggregation periods to trade off of, but picking the right time frame is the difference between a great trade and I just lost the house honey type of trade.

One of the things that keep in mind is that you can have a 1 minute, a 2 minute, a 3 minute, a 4 minute, or a 5 minute aggregation period. and they're all going to show different price action in regards to the different periods and indicators. But the closer you get to one minute, the more aggressive you are being because you're trading the shortest term movements. and in Reverse as you get closer to 5 minutes, you're trading a lot more conservative because you were trading a longer term per candlestick, so it's a lot more conservative because it's taken into account more time.

That is to say, if you trade a longer term candlestick and it gives you a confirmation. This confirmation candle is a lot more conservative than just a line one minute chart, but it also can clean up the price action a bit as it's a lot less sporadic. and that means that you can buy in at a more conservative conformation and sell out at a more conservative validation. We love writing from confirmation to validation and in terms of being clean, if you compare this 3 minute candlestick chart to the one-minute you can clearly see what I mean on this one-minute chart.

In comparison, we have very uncertain price action and tons of validation points. But of course that is not to say that the one-minute chart shouldn't be used quite the contrary. It's just to say that be lower you go, the more aggressive your analysis is becoming. An aggression is valuable.

It can be people in certain situations. If the 1-minute chart is showing rapid movement and clean price action, there's no reason not to be aggressive with it, right? It just so happens that in this situation it was too dirty and we don't like dirty price action. Okay, so another secret is really more of a warning, something that you need to avoid. A lot of people love the fluctuations in you guys in digas, as do I We love fluctuations, but there's a difference between fluctuation and uncertain price direction.

During this particular day, for example, we had tons of opportunities to buy in and profit, but we didn't really have clear direction. It started in a downtrend below our red directionless the May line. Then it broke into an uptrend, rejected that, and fought back and forth the rest of the day. And I want to remind you that when you don't have a clear direction, what that actually means is that you have a deprecating factor because you don't know worthy price is being pushed.

and that doesn't necessarily mean don't create the setup. A lot of people think that whenever there's a deprecating factor, you can't trade, but there's always one or two deprecating factors. The key is making sure that you're elevating factors outweigh your deprecating. once.

At this point here, for example, we were just at oversold and increasing and had a confirmation of price strength and had a previous pattern of recovering from oversold to overbought. Now, those are a bundle of elevating factors that's compared to just one deprecating factor. And that's the uncertain price direction. And why is this uncertain instead of downward? Well, technically we are in a downward direction here, but because we've been flying back and forth, it's kind of uncertain because we don't know where it's going to go.

So the key here is making sure that you understand how to balance your elevated factors again through deprecating ones. It's something that I always say, but it's so, so important because trading is really just a probability game. Anyways, folks. I Hope this video is helpful If you have any questions whatsoever, feel free to reach out to us below or join our free zip.

Create a circle Facebook Group For those of you who are struggling to grow your account and would like a step-by-step process and structured course that you can take your time with. Make sure to check out Zip Trader You! The link is in the description below and I'd Love to work with you anyways. Have a great day and I'll see you in the next video.