Natural Gas Futures Rollver

[emini.ninja 10]

I'm long on a soon-to-expire natural gas futures contract (05-2010 NG). How do I make sure that I continue to be in the long position event after the current contract expires? I trade with Interactive Brokers.

[Dinerotrader 10]

There isn't much discussion of long term futures trading at TL except the thread I linked below. It might get you started.

 

Related discussion

[sevensa 10]

I'm long on a soon-to-expire natural gas futures contract (05-2010 NG). How do I make sure that I continue to be in the long position event after the current contract expires? I trade with Interactive Brokers.

 

You will need to rollover to the new contract.

 

btw, shouldn't you have figured this out before you opened a position?

[emini.ninja 10]

Yes, I should have. I'm just beginning to explore futures. So far I've always closed my positions before the expiration. This is the first time I'm considering a longer term position with futures.

 

Thanks for the help!

[DugDug 10]

This will be dependant on how long you might wish to hold the open position for.....ie what your bigger plan/picture is.

But this might make things easier to visualize.

 

open all the natural gas contracts on offer for the say first 6 months.

check out their volumes, and which trade. (the closest a re obviously the most liquid.)

Then chart these together and it will give you a better visual idea of the months, spreads and the sorts of contango/backwardation issues you will have.

[Dinerotrader 10]

This will be dependant on how long you might wish to hold the open position for.....ie what your bigger plan/picture is.

But this might make things easier to visualize.

 

open all the natural gas contracts on offer for the say first 6 months.

check out their volumes, and which trade. (the closest a re obviously the most liquid.)

Then chart these together and it will give you a better visual idea of the months, spreads and the sorts of contango/backwardation issues you will have.

 

DugDug,

 

You seem to be the only one around that ever discusses long term futures holding. Can you put together a good summary post some of the basics of long term futures trading covering backwardation and contango considerations. I was just reading through good old wikipedia to learn more about this but I thought this thread in the beginners forum might be a good place for a thorough post from someone like you who has related experience. Just a suggestion. Thanks.

[DugDug 10]

I will see what I can do.

There are a few threads here already touching on the subject but as this is generally a day trading forum, frankly the best thing for most people to do who wish to longer term trading and concern themselves with this is probably direct them to a more appropriate website. Or do exactly as you mentioned which is look up the multitude of examples available on the wbe - goggle "backwardation and contango"

 

However, I think putting a few things together should be easy enough.

 

It depends on the strategy that a long term trader is trading as to weather backardation or contango is a major consideration. For some it complements, for others it detracts. For some it is necessary, for some its irrelevant.

 

This like many other subjects is full of different reasons for doing things for long term traders....eg; for when to roll over, the importance of correct data when backtesting, how to determine roll over times, seasonality. So it would be broad based and generalist.

Edited April 11, 2010 by DugDug

[macdfx 10]

I'm long on a soon-to-expire natural gas futures contract (05-2010 NG). How do I make sure that I continue to be in the long position event after the current contract expires? I trade with Interactive Brokers.

Buy a long in the new front month, and short to close out the old.

 

However, whatever "open P/L" you had in the old position will now be "realized P/L" as a result.

[DugDug 10]

I have attached a word document that has some information for futures, rolling and longer term trading issues regards backtesting and the effect of backwardation and contango.

 

It is simple and general - if you dont agree with it or would like to add to it feel free to download it, amend it and upload it, noting the changes in the thread....so its a free and open discussion.

I hope it helps anyone get started in answering some questions regards the issue.

futures and rolling.doc