At 1/10th the size of standard natural gas (NG) futures contracts, Micro natural gas futures (MNG) give traders direct exposure to speculate on the price direction of the dynamic natural gas market.
What Are Micro Natural Gas Futures?
Natural gas plays a critical role in the global energy landscape. As an abundant, versatile, and cleaner-burning natural resource than other fossil fuels, natural gas provides many countries with energy security and is used in cooking, heating, and about 25% of the world’s electricity generation.
Natural gas futures are actively traded globally by large and small traders alike and offer a more efficient trading instrument than energy stocks and ETFs. As part of the energy futures complex, natural gas prices are typically uncorrelated to other energy futures and major market stock indexes, making natural gas a great way to diversify your trading risk.
Benefits of Trading Micro Natural Gas Futures Include:
- Lower capital requirements: At 1/10th the size of standard contracts, Micro contracts make trading natural gas futures more accessible to traders with limited capital.
- Better risk management: A smaller contract size allows traders to be more precise in their trade sizing and position management.
- 24-hour trading: Natural gas futures provide good liquidity throughout the Globex trading session, offering more efficient entries and exits when trading opportunities arise.
Learn more about the overall benefits of natural gas futures.
What Affects the Price of Natural Gas?
Like many commodity-based futures products, with natural gas, supply and demand dynamics are often the primary driver of price direction and momentum. Seasonal weather patterns, global economic conditions, and geopolitical news can all have significant effects on the short-term and long-term price of natural gas. You can learn more about natural gas by visiting the IEA website.
Natural gas prices are mostly quoted and transacted in US dollars, and the strength or weakness of the dollar can influence natural gas prices. A stronger dollar might make natural gas more expensive for foreign buyers, potentially reducing demand and prices. A weakening dollar in a falling interest rate environment might make natural gas more attractive to foreign buyers, increasing demand and prices.
What Are the Risks of Micro Natural Gas Futures Trading?
As with all trading, the primary risk of trading Micro natural gas futures is that the market price will go against the trader’s position. It’s essential to always have a risk management plan in place that includes a stop loss or trailing stop. Traders should always actively monitor open positions and keep abreast of potential news reports that can affect the price of natural gas.
Before trading any new symbol, make sure you review and understand the contract specifications. If you’re new to trading, it’s also a good idea to practice in a real-time simulated trading environment like the one available on the NinjaTrader platform. This way, you can get familiar with the various trading and analysis tools and track market prices before risking real dollars.
Contract Specifications for Micro Natural Gas Futures
Each natural gas Micro futures contract represents 1,000 million BTUs, which is roughly 10 million cubic feet of natural gas. The official name for these contracts is Micro Henry Hub Natural Gas futures—named after the pipeline located in Erath, Louisiana that serves as the official delivery location for standard natural gas contracts. Micro natural gas contracts are financially settled, and there is no risk of delivery.
- Symbol: MNG
- Exchange: NYMEX
- Contract point value: 1,000 MMBtu
- Minimum price fluctuation: .001, (1,000 * per-contract per-minimum move)
- Trading hours: Sunday 6:00 pm ET to Friday 5:00 pm ET
- Listed contracts: Monthly contracts listed for 24 consecutive months
- Expiration style: Trading terminates on the 4th last business day of the month prior to the contract month
- First notice date: n/a
- Settlement: Financially settled
- Additional Specifications: View all from CME Group
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