I feel like second guessing this morning. It is time to be patient. Weather shifted from weaker, to even weaker. I held because I didn’t see the profits I was after… This bit me, because I half ignored the fact that weather forecasts were showing cold.
So when weather forecasts show up extremely bearing and the price responds accordingly, not until then, should I consider a long position, and certainly should exit short positions.
When the weather forecast shows up extremely bullish, and prices rise accordingly, not until then, should I consider a short position, and should certainly exit long positions.
I saw fairly bullish weather, and did not exit my long position. What has happened is the same thing that always happens. The first bullish shot of weather and weather related demand, the market tends to over-react. This year it cause there to be a draw on inventory a week or two weeks before normal. And…. it was a substantial draw, probably somewhat of a skew on the part of EIA.
When this happens early in the winter season, it tricks us into thinking the winter could be cold, and demand is going to swallow up every bit of storage, and prices could be at $10, so we better take a chance and get in. Then the hype is over; everyone comes to their senses. Since this first over-reaction in pricing, there will not be another without storage swinging to a deficit.
So what now? I feel like my entry points yesterday were a bit early, but that’s not my problem. My problem is that I was already holding too much from the previous trip, and I should have reduced further or exited UNL all together. Luckily I was half forced out of my KOLD covered put, as it is now backward substantially, and… I didn’t pick up a lot of UNG to replace that position until later yesterday.
Now I’m riding it out just to get my head above water. I’m ok, with this, it’s just lost time for nothing, and that’s frustrating. And it’s the same problem it’s always been. Too big of a position to manage. Too soon is also part of the issue, but too much is the biggest problem. Size positions small as to “never” run out of a means to manage the position. It slows profits, but it doesn’t if you can’t seem to make money otherwise…
Sooo, I”m going to hold what I’ve got and I’ve started converting my funds from my UNL position to UNG.
I sold 50 shares of UNL at 7.58 and bought 40 shares of UNG at 9.2 yesterday as prices seem to slow. Part of me feels like I’m just getting excited for nothing, and the market will cycle back around before I know it. The problems is…. I’ve held too much from a much higher price, saw a profit and didn’t cover at a profit or even at break even. I simply held too much for too long. This is a problem as decay will crush me in the long run. I’m not even seeing as big a hit as I’ve seen in my example account. Today is just hitting home because of what I “should have done” and know I should have done it.
Moving on. I’ll hold today and If prices have another slide today, I’ll cover another 50 shares of UNL and place those funds into UNG again. If UNG gets close to $8.5, I’ll make this change to my account. It hurts now, but I’ll see this one through like all the other times. I’ll get over it next week when prices start oscillating. Good Luck, hope the weekend is good to you.