Understanding Natural Gas Futures – NinjaTrader Blog


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One of the most popular contracts for trading natural gas are the NYMEX Henry Hub Natural Gas (NG) futures from CME Group. Natural gas is the world’s third largest futures contract for physical commodities and NG futures serve as the global benchmark for this market.

Henry Hub is the main natural gas hub in North America. As a hub for several natural gas connections, the delivery point for Henry Hub Natural Gas Futures is located in Louisiana. With an extensive infrastructure including interstate and interstate pipelines, Henry Hub provides turnkey pipelines to natural gas shippers and marketers serving markets across the United States.

When local markets in the United States price their natural gas, they usually do so based on a difference from Henry Hub. This difference takes into account regional market conditions, transport costs and available transmission capacity between locations.

Trading natural gas futures has many advantages. Watch this 2-minute video to learn more –

Benefits of Trading Natural Gas Futures

  1. Deep liquid markets – Traders can enter and exit positions with the third largest physical commodity futures contract in the world by volume. 400,000 contracts are traded daily with 1.4 million open interest.
  2. Capital efficiency – Traders can control a large contract value with little capital. When used correctly, this is an effective way to increase capital efficiency.
  3. Physical settlement – NYMEX NG futures are closely linked to the spot market, which reduces slippage.
  4. Trade on settlement – Natural gas TAS spreads (NGT) are available on NYMEX in any spread combination for the first 12 consecutive monthly contracts.
  5. Global benchmark – Natural gas is the world’s third largest futures contract for physical commodities with growing usage in South America, Asia and Europe.
  6. Almost 24 hour trading – Natural gas trading 23 hours a day, 6 days a week. This offers more opportunities to trade futures as the day progresses.

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This article is for educational and informational purposes only and should not be viewed as a solicitation or recommendation for any product, service, or trading strategy. It contains content from independent persons or companies that are in no way affiliated with NinjaTrader Group (NTG) or any of its affiliates. The content and opinions expressed in this article do not necessarily reflect the official policies or position of NinjaTrader or any of its affiliates.

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