On a risk to reward basis which is the better trade? The gold trade or the natural gas trade? I think they are close to equal ground, but the more I think about the more I think that the UNG ETF Natural Gas trade is the one that has more merit in terms of maximum risk reward.
But let me be clear, the UNG ETF potential move is still a much different animal than the gold market. I don’t think it can be said that natural gas is in a long term bull market. It is an entirely different animal. But nevertheless it has had a massive bear market crushing decline and now looks like it wants to get started on the ‘busted pattern’ setup that I had mentioned a couple times before.
I had talked about a couple weeks ago about how I thought the UNG ETF was a possible good buy and may start working on the busted pattern setup right away. The day after the UNG got slammed down and a few comment posters made light of that fact. That is ok by me. I am open to criticism and praise. I don’t claim to be a market timing God. But I would say that there is no reason to get too emotional about a losing or winning trade. It doesn’t support your long term trading plan or your emotional constitution. Better to just take losses as they come and consider them learning experiences. Become numb to them and then focus on the charts and the setups like a robot.
But if you have 10 losses in a row, or even 5, then it is not a bad idea to take a major time out and cool down because clearly either your method is wrong, you are fighting the primary trend of the market, or there are other interferences. So step back and get a change of scene, shut the computer off and go fishing. Then when you are ready, get a fresh perspective.
So the UNG ETF looks to me like it wants to break up and through that black down trendline and then meet the apex of the triangle. If it can bust up through there then we may have a busted pattern setup and a nice move.
If at First you Do not Succeed then Try Again!
That seems to be the ‘lesson’ with the UNG ETF. Although the story is not fully complete. But remember people are most bearish at bear market bottoms and most bullish at bull market tops… And also the greatest returns are during the first moves off of a bear market bottom.
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