Natural Gas (UNG)

Mentioned a couple days ago my trade in natural gas, UNG (ETF), had finally moved in my favor, but I stayed away because it had a huge 5%+ day.  Today it pulled back to about 2% above my initial purchase and I went back in for my second buy.  You can see the update on the How I'm Doing page.

I'll discuss stops in more detail in a later post, but on UNG, I had set my stop prior to today at 5.24, slightly below a long term low of 5.27.  Well, now I have more exposure and that's a 14% drop from today's close which is more than I'm willing to risk.  I don't set my stops the same way on each position, but I'll rarely have more than a 10% stop.  There's a recent low (mid-December) at 5.53 so I'm going to move the stop up toward that, which will put me just under 10%.

Positions Updated for 1/3/11

How I'm Doing has been updated for Jan 3rd. I don't expect to write an update each day, but today's 5%+ increase in UNG deserves a comment.

Normally I would look to make a first addition to a long position when it first moves approx 2% in my favor. Nothing magical about 2%, I just want to see a positive move to confirm the trade is working. BUT, when a position blows past my 2% mark, I'm going to take a wait and see approach.