4 Steps to Becoming an Introducing Broker

become an introducing broker

New forex brokers have different ways to enter and offer forex trading services in one of the most fascinating and lucrative markets in the world. One way to do so is by becoming an introducing broker (IB). 

Much like an affiliate marketer, introducing brokers operates in collaboration with another brokerage firm that already has a client base and a successful profitable operation. However, an IB broker is much more than an affiliate marketer. It’s a real partnership between two firms where the IB broker is able to offer additional services and even make higher commissions.

Therefore, if you have the ability to attract forex clients and provide forex trading services, becoming an introducing broker could be the ideal solution for you. With the steps we have outlined in this article, you can start an IB business. But firstly, let’s understand what an IB Introducing Broker is…

What is an Introducing Broker (IB)?

An introducing broker, also known as IB, has a direct relationship with forex clients but without having to directly execute trades for them. Instead, the trades are executed by the brokerage firm with whom the IB partners. This means that the introducing broker directs clients to the partner broker, provides trading services such as consolation and customer support, and in return, receives a commission for every trade executed by the partner broker. 

Essentially, referring clients to a brokerage firm might sound like what an affiliate marketer does. However, there are some notable differences between an affiliate and an Introducing Broker. An affiliate basically can set up a website or simply refer clients by using affiliate links and get paid for referrals for the brokerage. An IB, on the other hand, not only brings in clients but also provides trading services and consultation. An IB can create long-term relationships with clients that are based on the quality of their services and the professionalism they offer. Secondly, an IB doesn’t accept and hold clients’ funds. Lastly, an IB does not need to have a compliance department and proceed with KYC procedures with clients.

How to Become an Introducing Broker (IB)?

If you are wondering how to become an Introducing Broker,  here are the steps you need to take. 

1. Find the Right Brokerage Firm to Partner with

The next step is to find the right broker you want to partner with. There are lots of forex and CFD brokers to choose from so this step might be the most important of all. In some cases, you might have to open a trading account with the prospective partner broker and find clients’ reviews about the firm. 

Further, you should consider the following aspects before you sign up with a partner broker:

  • Is the broker licensed and regulated?
  • What financial assets do they offer? Forex, CFDs, options, stocks?
  • How long do they operate in the forex trading industry?
  • What’s their reputation?
  • Do they have good trading platforms and mobile trading apps?
  • What’s their commission structure for IB?
  • Do they offer marketing assistance?

As we mentioned, finding a regulated brokerage firm to partner with is not an easy task. The forex industry is filled with unregulated brokers and occasionally, even scam brokers. As such, you need to ensure that clients get safe trades and are able to withdraw funds whenever they wish. Partnering with a regulated and reputable broker is essential for your success as an IB.

What’s more, you need to sell your clients a top-notch trading experience and preferably, low trading costs. So, an advanced trading platform and a mobile trading app will help you attract more clients. Additionally, a wide range of financial instruments would be another crucial factor. Make sure you choose a  partner broker that gives your clients access to shares, ETFs, Forex, commodities, indices, and cryptocurrencies. 

2. Close the Partnership Deal with the Partner Broker

Now that you have set your mind on a certain brokerage firm to partner with, it’s time to check out what they are actually offering you. Look at the execution model they have – ECN/STP or market maker, check their commission per trade, and understand all the terms and conditions they have for IB. 

Also, try to figure out whether the rates they offer match your clients’ style. If you can bring heavy traders with a large sum of money to trade with, you might have to choose forex brokers with VIP accounts, and special terms for those who trade with large account balances. Ask your partner broker how flexible they are with the commission types they offer and do they have special packages for the type of clients you plan to refer. Further, will they provide special trading tools for IBs? Do they offer a demo account? Islamic account? 

Then, once you have got the answers and you are certain you made the right choice – close the deal. 

3. Find Clients and Refer them to the Partner Broker

Now it’s time to find clients and refer them to your partner broker. After all, this is how you can make an income from becoming an IB.

To do so, you need to create a website and social media pages or use your existing contacts, if you have any of these. Try to differentiate yourself with the unique service and trading tools you provide your clients. Most importantly, be attentive to your clients’ needs and help them find a way to get reliable access to the market.

When your clients feel that you have the tools to provide them top-notch access to the trading world, you’ll be able to develop a long-term relationship and increase your client base. This will benefit you as an IB as well as the brokerage partner you are promoting. 

4. Build on Your Success

Lastly, you need to build a successful business. One way to do that is to develop an online presence by building a website, social media pages, newsletter, etc. Obviously, you’ll have to create a unique name for your business, whether you decide to use your personal name or a professional brokerage firm name. 

One thing you need to remember – in the world of online trading, reputation is everything. A successful introducing broker usually has the most satisfied customers. So, make sure your clients are satisfied with the trading experience you provide them and do everything possible to transfer that information forward. This can be done via reviews, forums, a YouTube channel, trading tutorials, etc. 

Becoming an Introducing Broker (IB) – Things to Keep in Mind

Now that you have the necessary information on how to become an introducing broker, here are some additional key points to keep in mind. 

You need clients, and you need them now!

As an IB, you need clients. And the more clients you have, the more successful your IB business will become. This means you need to get the word out quickly and aggressively. Use different marketing methods, and set aside a generous budget for marketing. If you don’t have clients, you cannot build a reputation and your business will fail sooner than expected. 

Find a business model

Finding a business model that works takes time, especially in a competitive industry like the forex one. Nonetheless, try to do your best in order to build a business that works for all sides – that is your company, your forex clients, and your partner broker.  

Some forex brokers prefer working with beginner traders while others insist on working with professional high-volume traders. It all depends on the circumstances. Be attentive to your partner broker and make all the calculations that may benefit all sides. If doing so, eventually, you’ll be able to find the right business model. 

Make your partner broker satisfied

In this arrangement, your partner broker is your most important client. Make sure you not only choose a brokerage partner that is regulated and licensed, but also a broker that has a good staff so you can build a long-term relationship and mutually profitable partnership. Also, ensure they are happy with the service you provide and ask them occasionally if there’s anything you can do to improve your offerings.


Become an Introducing Broker Now!

With more people joining the online trading arena and looking for ways to grow their wealth, now is the best time for you to find a partner broker and build your own client base. Start today by reaching out to them, and making the first step to create a successful IB business.


How to Day Trade Crude Oil Futures and CFDs

crude oil trading, commodity trading

Crude oil is one of the most vital energy sources used globally and is a highly traded commodity.  It can be traded physically or for the purpose of speculating on the price of crude oil and making profits from short-term movements. 

If you consider crude oil as your primary day trading asset, you need to understand the basics of the ‘black gold’ commodity. In this guide, we’ll help you find out if crude oil is the best asset for you to day trade, what are the factors that impact crude oil prices, the methods in which you can trade crude oil, and more. 

Key Points to Take Away

  • WTI crude oil is the most popular and traded commodity in the world with nearly 1.2 million contracts traded on a daily basis
  • There are different ways to day trade crude oil. These include futures contracts, CFDs, ETFs, and options.
  • When trading oil futures, there are several factors and important reports that impact crude oil prices
  • Some of the tools that can be used to day trade crude oil futures include crude oil vs natural gas spread, trading the fundamentals, and understanding contango and backwardation

Is Crude Oil Good for Day Trading?

The short answer – absolutely, crude oil is a great asset for day trading. It’s an extremely popular commodity due to the fact that it offers high liquidity and market volatility. Further, there are various factors that impact crude oil price –  including geopolitical factors, seasonal demand, storage costs, etc – which make crude oil among the most interesting financial assets to trade. 

On the other hand, you need to take into account that the volatility of crude oil prices can work against you. It all depends on the type of trader you are and the type of trader you want to become. Typically, crude oil prices are moving fast in heavy trading and in large amounts. It is, therefore, a favorable commodity for aggressive traders that look for wide price swings rather than stable and ranging markets

Fun Fact

OPEC member countries control under 80% of the total crude oil reserves around the world

All the Ways to Day Trade Crude Oil

Much like any other financial instrument, there are various ways in which you can get access to crude oil day trading. Every way has its own pros and cons so you better investigate each method before you start day trading crude oil. 

Crude Oil Futures

The first and most conventional way to trade crude oil is via futures trading. In essence, crude oil futures are financial contracts between buyers and sellers to buy and sell the specified commodity at a certain price and date. 

There are different hubs for crude oil futures contracts with the most popular of all that is also used as the benchmark price for oil prices is the NYMEX West Texas Intermediate (WTI) Crude Oil futures. In 2008, the New York Mercantile Exchange (NYMEX) was acquired by CME Group, so the contracts are available on the Chicago Mercantile Exchange

The main attractions of trading crude oil futures contracts via the CME are the ability to buy and sell futures contracts with different expiration dates. As a matter of fact, many day traders use this as a trading strategy and trade the spread between futures rather than buying or selling an individual contract.

crude oil futures, commodity trading

Another major benefit of trading a crude oil futures contract is the use of the level 2 order book. This allows traders to view all the buyers and sellers and quantities of each crude oil futures trade.  Therefore, they can get a sense of the sentiment in the market and have information related to the specified market. 

Crude Oil CFDs (Contract for Difference)

Needless to say, there are lots of advantages to trading crude oil futures on a commodity exchange. The level 2 order book, the rebates, tight buy and sell spread, etc. But, trading crude oil futures is not necessarily the best option for every trader. 

First, it requires a high initial investment of somewhere around $5000-$10000 (although some brokers will allow you to open a futures trading account with $1000). Secondly, you need to expect a long and complicated registration and verification process. After all, crude oil is a physical commodity, which means that in some futures contracts, you ensure you’ll deliver the commodity at a predefined location and at a certain date. 

So, another way to get access to trading crude oil futures prices is through CFDs. These are basically derivative contracts of the NYMEX futures contract that enables traders to simply speculate on crude oil prices without physically holding and having to deliver the commodity. For that reason, CFD brokers require a low initial investment, provide leverage of up to 50:1 and give users access to free top-notch trading platforms and tools. 

Here, at Switch Markets, we offer crude oil futures trading via CFDs with a leverage ratio of 50:1, no fixed fees, and access to the popular MetaTrader 4.   

Crude Oil ETFs (Exchange Traded Funds)

Another way to speculate on crude oil prices is via Exchange Traded Funds (ETFs). These crude oil ETFs are essentially a basket of top oil companies around the world that make their income from distributing and selling various petroleum products. For that purpose, you’ll have to open an account with a brokerage firm that gives you direct access to stock exchanges (although many CFD brokers also provide Exchange Traded Fund trading). 

Nonetheless, here are the 5 most popular crude oil ETFs as of 2022:

FYI

The global supply of crude oil is expected to meet the world’s demand for at least the next 25 years

How to Day Trade Crude Oil?

Trading crude oil is no different than any other instrument. You’ll have to develop a trading strategy and master your fundamental and technical analysis skills. 

But before (and after) you develop a trading technique and learn how to use a trading platform – here is the information you must know when day trading crude oil futures. 

Factors that Affect Crude Oil Prices

There are several different factors that have a direct impact on crude oil prices. These include:

  • Seasonal demand
  • Economic growth and recession
  • Geopolitical events –  conflicts, wars, etc
  • Disruption in oil transportation
  • Increase or decrease in oil output by top oil-producing countries
  • Green energy technology improvement
  • Price movements in other petroleum products – natural gas, heating oil, Brent crude oil, gasoline, etc

Major Oil Companies to Follow

Even though the oil industry has been hit by the Covid-19 pandemic, it is still considered by many as the most profitable industry of all and the backbone of the global economy. Furthermore, there are signs of a recovery of the oil industry as the demand for oil is rising following the mini-crisis in 2020.  

Therefore, as a crude oil trader, you’ll not only have to follow the energy industry but also need to keep your eyes open and follow major oil and petroleum-related stocks. These companies include

Crude Oil: Key Data to Watch

Below, you can find some of the most important reports you need to watch when trading crude oil:

For more information, check our guide – How to Trade Natural Gas: Key Data to Watch

Fun Fact

As of early 2022, Saudi Aramco is the 3rd largest private company in the world in terms of market capitalization with a valuation of nearly $2 trillion. 

Tips and Trading Strategies for Day Trading Crude Oil

Professional oil traders need a trading strategy and a better understanding of the oil market. Remember, the oil market is quite complicated and you must increase your knowledge about the politics of the oil markets. To do so, you can read about the Petrodollar system between the United States and Saudi Arabia, the Russia-China oil and natural gas deal, etc. 

With that in mind, below are some tips and tools that you can use and integrate into your trading strategy:

Know and Trade the Fundamentals

Crude oil is primarily influenced by fundamental factors such as geopolitical events, weather, economic growth, etc. This means that if you are planning to day trade crude oil, you need to follow the news and trade the fundamentals. 

You can follow oil and gas websites, the EIA official website, Twitter (#crude oil, #WTI, #oilprice), etc. All for the purpose of knowing exactly what is going on in the oil market at any given time. 

Crude oil vs Natural Gas Spread

As an inter commodity spread, it is not surprising that there’s a strong correlation between crude oil and natural gas. Much like the gold to silver ratio – crude oil vs natural gas spread can be used as an indicator to buy or sell one of the assets, especially for intraday trading. In many cases, you’ll notice one of the commodities is moving before the other, which will help you find lots of trading opportunities. 

crude oil vs natural gas, trading chart

Crude oil vs Natural Gas Chart

Understanding Contango and Backwardation

In 2020, the price of a barrel of WTI crude – perhaps the most important benchmark price crude oil – fell below zero for the first time in history to a level of minus $37.63 per barrel. How is it possible? Well, basically the storage of crude oil is a factor that must be taken into consideration. At that time, when the coronavirus pandemic emerged and the lockdowns were implemented, no one wanted to buy oil products and sellers were willing to pay in order to get rid of the high crude oil storage cost. 

That is known as contango – a situation in which the future price of crude oil (or any commodity) is higher than the spot price. On the other hand, backwardation occurs when crude oil spot prices and the price of front-month futures exceed the price of futures contracts.  Usually, the crude oil market is in backwardation because there’s a constant demand for oil products. However, you must learn the concept of contango and backwardation and understand the huge impact storage costs have on oil prices. 

contango and backwardation, commodity trading

Source: Wikipedia

Day Trading Crude Oil Futures vs Forex

Beginner traders usually contemplate on what asset or market to focus on – crude oil (commodities) or forex. Clearly, there are a lot of opinions on both sides and you’ll most likely have to try each market before you make a decision. 

To start with, here are the main factors you need to consider:

Leverage: In the FX market, the leverage ratio can reach up to 500:1 while crude oil comes with a lower leverage ratio of up to 10:1 on futures exchanges and 30:1 with CFDs (Some CFD brokers like Switch Markets offer a higher leverage ratio of 50:1 for commodity trading). 

Volatility: Make no mistake, the forex market is volatile but is not as volatile as the crude oil market. However, bear in mind that volatility can work for you as well as against you so you need to develop your trading strategy and trading style before you choose the asset you want to trade on. 

Diversity: The good thing with the FX market is that you have a wide selection of currency pairs to trade on. The crude oil market, on the other hand, enables you to focus on one product only (unless you trade futures contracts with different expiration dates). That is, for some people, very monotonic. 

The bottom line – the volatility of crude oil can be certainly risky, especially for beginner traders. Having said that, it’s all up to you to decide. Traders who love fast-moving markets will prefer trading the crude oil markets while those who prefer diversity will choose the FX market. Our tip – Try both on a demo account and then decide. 

Fun Fact

According to researchers, oil has been used in different societies since the 3rd century BC

Final Thoughts

All in all, crude oil is certainly a good choice if you want to get involved in day trading. Oil is a liquid and volatile commodity and there are plenty of factors and market news announcements that affect crude oil prices. It is an exciting market to get into with different angles and interpretations. If you feel that you have an aggressive trading nature, crude oil could be the asset of choice for you. 

In this case, all that is left is to choose the best way of trading crude oil. Taking aside ETFs – the best choices for you are crude oil futures contracts or CFDs. If opting for the second option, Switch Markets enables you to trade crude oil with a leverage ratio of 50:1 on the MetaTrader4. But if you still have doubts, you can get access to a demo practice account before risking real money and see how the crude oil market works in real-time.  

FAQs

What’s the difference between WTI crude oil and Brent crude oil?

Brent and WTI Crude oil are the two main benchmarks for oil prices, located in different areas in the world. While Brent crude oil, traded on ICE exchange, is considered an international benchmark, West Texas Intermediate (WTI) is a US light sweet crude oil benchmark that trades on the CME exchange. 

Is oil traded 24 hours a day?

Well, basically yes. But not 24 hours. Only 23 hours a day. This is because the CME crude oil futures markets are open 5 days a week from 6:00 pm US until 5:00 pm ET. 

What’s the best way to start trading crude oil futures?

This largely depends on your goals as a trader and the budget you have to start your day trading journey. To be honest, if you are planning to become a professional crude oil day trader – then the best option is to invest a large sum of money (at least $15K-$25k) and open a futures trading account. Otherwise, the best way for you would be to open a CFD trading account – The deposit requirement is low, you get a high leverage ratio, there are no fixed trading costs (only spreads), and the tick value is not as high as trading crude oil futures contracts ($10 per tick for the standard futures contract, and $12.5 per tick for the mini crude oil futures ).  

How to trade crude oil on MT4?

To trade crude oil and other commodities on the popular MetaTrader4, you need to find a CFD broker that offers users the MT4. Switch Markets, for example, offers traders to open a trading account and get access to crude oil trading via the MT4 with a leverage ratio of up to 50:1.

Everything You Need to Know About The Gold-Silver Ratio

As its name suggests, the gold to silver ratio is a ratio that measures how many ounces of silver are needed to purchase just one ounce of gold. Due to the historic role of these two commodities and the fact that both gold and silver are extracted from the earth, many investors believe that it is a reliable indicator to predict gold and silver’s future performance. 

But how can you use this ratio in your trading? How does the gold-silver ratio really work? And what is the magic ratio number of the gold to silver ratio?

Key Points to Take Away

  • The gold-silver ratio is widely used by investors to predict future price movements of the two precious metals.
  • Since the early twentieth century, the average gold to silver ratio has floated between $40-$60.
  • The gold/silver ratio is one of the most ancient indicators applied by gold and silver traders and dates back to around 700 BC.

Understanding the Gold to Silver Ratio

From the basic point of view, gold and silver are some of the only precious metals commodities with intrinsic value that are not influenced by inflation, deflation, and the uncertainty of the world economy.  Each precious metal has its own unique features that remain irreplaceable until now, and both of them are expected to be even more precious in the future. 

Historically, these two metals became a legal form of money around 700 BC when the first Roman coins were issued to the public. Since then, gold and silver have had a strong financial connection known as the gold to silver ratio. As a matter of fact, the gold to silver ratio is most likely to be one of the most historical ratios to be made and it remains a significant ratio in the financial system until today. In Roman times, the gold-silver ratio was fixed at 12:1 and by the 18th century, the ratio was set to 15:1 in the United States and to 15.5:1 in France.

During the 20th century – when the free market economy has developed – the average gold-silver ratio was 47:1 though it experienced lots of extreme highs and lows over the century due to the great depression, the gold standard act in 1900 and the decision of the US government in 1971 to no longer convert US dollars to gold at a fixed rate.  

Since the beginning of the current century, it was mostly trading at a range between 40-80 until the ratio peaked to an all-time high of above 126 due to the impact of the Covid-19 pandemic in early 2020. But once again, since the economic recovery started in May 2020 and the end of lockdowns have resulted in a massive rebound in global economic activity, the spread dropped to be trading around 60-80.

Gold Silver Ratio Monthly Chart
Gold to Silver Ratio Monthly Chart

Simply put, the ratio measures how many silver ounces are needed to purchase one ounce of gold. It is a fairly simple ratio that calculates the relationship between the gold spot price and silver spot price. Meaning, anyone can make this calculation by dividing the price of gold by the price of silver. 

So, what’s the big story with this ratio? Well, for many reasons and in many ways, the gold-silver ratio has been an extremely reliable indicator to make investment decisions by gold and silver traders. This can be attributed to the high correlation between the two assets, and perhaps even the myth of the gold to silver ratio.

Regardless, many traders take advantage of probably the most basic and simple ratio out there.

Why Does the Gold-Silver Ratio Matter When You Trade Precious Metals?

Throughout modern history, gold and silver have been human’s most pure and widely used forms of money. That made the gold and silver ratio such a vital piece of information and even nowadays, the ratio is being used by metals merchants and traders. 

In trading, investors who trade gold and silver, as well as other precious metals, use the gold-to-silver ratio as an indicator for the right time to make a purchase or to sell one of the metals. Also, according to geologists and ‘rational’ traders, the ratio should be close to the ratio of silver to gold in the earth’s crust. If this is the case, then there’s no doubt that the gold-silver ratio should drop at some point. Theoretically, some people believe that the ratio should be set at 16:1 in favor of gold, which is the same ratio it has been trading for centuries. Others even take it further stating that in the current market conditions at which silver is widely used in industrial applications and electronics, the ratio should be in favor of silver. 

Nonetheless, in my view, for the average Joe trader – there’s no question about the importance of the gold-silver ratio. It has been there for thousands of years and is closely watched by professional day traders and long-term investors. 

Trading the Gold-Silver Ratio – How Does It Work?

In essence, trading the gold-silver ratio works on a very simple principle. As mentioned previously,  the ratio simply measures the number of silver ounces an investor needs to trade in order to receive one ounce of gold. For instance, if gold (XAU/USD) is trading at $1860 per ounce and silver (XAG/USD) is trading at $25 per ounce, then the ratio is set at $74.4. 

Keeping that in mind, there’s no future contract or any derivative contract that enables you to trade the ratio directly. To trade the ratio, you can basically trade gold and silver future contracts or commodity CFDs. This basically means that the ratio is being used by gold and silver traders as a signal to determine which metal outperforms the other at a given moment.  

Generally, some investors believe the ratio should be in line with the availability of the two metals extracted from the earth. It should also be traded somewhere between the average levels since the early 20th century that fall somewhere between 50-60.

Therefore, as mentioned, the ratio is only being used as a technical indicator to buy and sell one of the metals on the assumption that assets should be trading close to their averaged ratios. Obviously, the ratio fluctuates to extreme prices from time to time, which is an indication for investors to buy or sell one of the precious metals with the hope that the ratio will be trading again at ‘normal’ levels.

Gold to Silver Ratio 1900-now
Gold to Silver Ratio 1900-now

For example, when the Covid-19 pandemic burst, the demand for gold was higher than the demand for silver, which caused a very high spread between the two precious metals. How high? Some experts and historians say it has been the highest level in 5000 years. But then, as things calmed down following the pandemic crisis, the gold and silver ratio dropped from 126 to its slightly above average levels of around 70.

What was the catalyst behind the huge drop? Simply because the demand for silver was higher than the demand for gold in the industrial world, especially at times of trade shutdowns. So, when economic activity went back to normal, silver prices rose more than gold, and the spread tightened.

As evident from the above – while gold is mainly a safe haven asset, silver is one of the most highly traded commodities and widely used metals in the world – it is used in a variety of products including LED lighting, solar panels, touch screens, TV screens, mobile phones, water purification, and other electronic equipment.

How to Day Trade the Gold Silver Ratio?

Another interesting approach to using the gold-silver ratio is through intraday trading. Clearly, there must be a strong correlation between yellow metal and silver, especially when these two metals are known as safe-haven assets and are being used for a variety of similar purposes. So, how can you actually use the gold to silver ratio in short-term trading and implement it in your trading strategies?

First, if you closely watch the trading screens on a daily basis, once in a while you might be able to notice an early sign from one of the two metals – meaning one precious metal moves in a certain direction before the other metal makes the same move. For instance, if gold prices rise but silver prices are neutral or fall on the same day, then a good position to take in this case is to buy silver (or short-sell gold).

Another way is to find support and resistance levels of the gold to silver ratio historical chart and use these levels to determine entry and exit levels. For example, the 40, 60, and 80 are crucial levels for the gold to silver ratio and can be effectively used to buy or sell one of the metals. 

Lastly, another trading strategy is to analyze the trend for both the gold and silver ratio and the assets on their own. In this case, you can use the following formula to decide which one of the metals is in the strongest trend and thus, to buy or sell a certain metal.

Gold Silver RatioGold and Silver trendAction
UptrendUptrendBuy Gold
UptrendDowntrendBuy Silver
DowntrendUptrendBuy Silver
DowntrendUptrendSell Gold

Conclusion

In conclusion, the gold to silver ratio could be a handy tool to determine when you enter a gold or a silver position. Working in the commodity trading space, I’ve heard many gold and silver traders constantly talking about the gold-silver ratio and its huge impact on market speculation. 

All in all, in my opinion, it’s not too complicated to take advantage of the gold-silver ratio when trading precious metals. You should always place silver below gold on your watchlist and follow the gold-silver ratio. Then, you’ll be surprised by how many trading opportunities you’ll be able to find when using this ancient ratio. After all, even the Romans and the Greeks used it at some point in time, so maybe you should too… 

FAQs

Why is the gold-silver ratio so high?

At the time of writing, the gold-silver ratio trades at around 74 after falling from the all-time high levels it reached last year due to the coronavirus pandemic. In 2020, the ratio was trading at 126 – the highest level ever recorded. The reason for that was the huge demand for gold due to economic uncertainty. Since then, the ratio is still trading at relatively high levels, however, it has dropped significantly due to the economic recovery around the world and the increasing demand for silver (especially during the lockdowns and trade shutdowns).

What is the gold-silver ratio right now?

As mentioned before, you can always calculate the gold-silver ratio by dividing the current gold price by the current silver price. Additionally, you can check the gold-silver ratio quotes on reliable portals like TradingView.

What affects the gold to silver ratio?

Well, the gold to silver ratio simply measures the price of gold in relation to the price of silver. So, it would be better to ask what affects gold and silver prices? Both precious metals are known as safe-haven assets, although gold is the most logical choice as a protection against inflation and uncertainty. On the other hand, gold does not have many industrial uses like Silver. 

The bottom line, in periods of economic downturn and stock market crash, the ratio tends to rise due to high demand for gold while in periods when the global economy functions well, the ratio is expected to fall due to the increasing demand for silver. In addition, it is worth noting other factors that might affect gold and silver prices include the US dollar, interest rates, and supply of gold, silver, and other precious metals like Platinum, Aluminum, etc.

What is the ratio of gold to silver in the earth’s crust?

Presently, geologists believe that the abundance of silver is much greater than gold, or in other words, there is approximately 19 times more silver than gold in the earth’s crust. 

How to Build the Perfect Setup for Day Trading

There’s quite an interesting discussion between musicians about the impact of various tools on the sound a musician is able to produce. Some people will argue that you could be the most talented musician in the world but if you don’t have the right equipment, then… Moreover, some medium musicians were able to get that one pedal, tool, or amplifier that makes their playing sound so special and unique. 

In some way, the same applies to trading, especially if you are going to make it as a profession or at least be serious about it. You, therefore, need some tools such as a strong computer, monitors, good trading platforms, VPS service, signals services, and more. In other words, a good trading office setup makes a world of difference in becoming a successful day trader and investor.

You might have to make an initial investment and spend money to create your own trading space, but over the long term, it can lead to future opportunities and better future performance. So, with that in mind, in this article, we take a closer look at some of the most important things you need to get in order to build the perfect setup for day trading. 

Trading Tools and Services You Need for Trading the Markets

1. Strong Computer

Obviously, the most important tool of all is your computer. To quickly switch between charts, view data, get detailed on-screen information, and execute trades – you need a reliable and strong computer. 

So, the first question – are you a mac or windows user? If you’re a Mac user like me you might already know how limited we are when it comes to compatible trading platforms. Still, you have the option to install Windows on your Mac with Bootcamp or Parallels so you can basically use any software available on the market. 

The second question – desktop computer or laptop? Well, the answer lies in your preferences and how you feel more comfortable sitting in front of a computer. Generally, most traders will tell you to use a strong desktop computer, however, in my opinion, it’s not the most crucial factor these days. There are strong laptops now in the market, and you can connect them to several screens and create a great setup with just one laptop. 

So, if choosing the latest, then a laptop with 16GB or more of RAM, and a processor that contains at least 4 to 6 cores should do the work for day trading. Another factor to consider is the size of the screen. It’s advisable to buy a notebook computer with a screen size of 15.6 inches. 

Otherwise, if you insist on using a desktop, then search for at least 16 GB RAM, a processor with at least 2.8 GHz Processor, SSD, and a graphic card with at least 2 GB of GPU.

2. Monitors for Trading

So, by now, you have a strong computer and good effort. That’s good, but you still need to look at something, meaning, the next step is to get multiple monitors for day trading. This is not something you can compromise on as several monitors can help you to get more screen space, keep track of several markets, get a comprehensive visual analysis and data sources, etc.

But, here’s the thing – too many monitors could be very confusing, especially in the beginning. In my experience as a day trader in a trading room, some traders even felt more convenient with just 3-4 screens (that will be enough for you to view at least 12-16 charts). I also know people that trade with one monitor and are doing well. One instrument, one chart – that’s it

Personally, I like the idea of having many monitors in front of you. There are more opportunities and more trade ideas. Hence, I think the most ideal way is to start with 3-4 monitors, and if at some point, you feel that it is not enough for you, you can invest and add more trading screens at a later date. 

In terms of the brands and products to buy, some of the best screens for day trading include: 

  • Samsung CHG90 
  • Dell S Series Led-Lit Monitor 32″ Black
  • LG 43UN700-B 43 Inch Class UHD
  • DELL 24 Inch U2415 Ultrasharp 
  • HP VH240a 23.8-Inch Full HD

3. Trading Platform

Going back to the analogy of musicians, a trading platform is your precious instrument in your trading activity and one of your most important tools to get the most of your trading experience. But choosing the right trading platform could be quite a challenging task that requires in-depth research and the process of trial and error. 

So, where do you start from? First, you need to decide on the market or type of asset class you are going to trade. For instance, if you have plans to trade FX currency pairs and CFDs, then stick with the MT4 or MT5. It’s simple, solid, and fast. Another excellent choice for forex and CFDs is the cTrader

Otherwise, if you want to focus on futures, stocks, and options – then some of the best options include the NinjaTrader, TradeStation, and CQG. 

4.VPS Hosting Provider

A few years ago, I had a fairly big losing trade due to internet disconnection or internet outage. Very frustrating – you make such a huge effort and eventually, you get hit by an unexpected enemy. The solution – a Virtual Private Server (VPS), which is basically a form of web hosting that ensures you always have a good connection to the markets and you can avoid slippages and internet cut-offs. Further, a VPS can significantly reduce the latency, which helps you get a faster market execution than using your broker’s server.  

Usually, the vast majority of VPS hosting services charge around $30-$90 per month. However, some brokers provide you with a VPS hosting service as a free plugin when you open a forex/CFDs trading account.

5. Something Fun to Do

Looking at numbers for long hours every day could be a daunting task. Obviously, there are lots of exciting moments in the markets, but at the same time, there are times when the markets are silent and you’ll have to find a way to stay focused. And, even if you are on a strike of daily returns, you always need to find this one fun activity you like to get you out of the markets. 

That was a great tip I received at some point from one of my mentors. For me, reading a book for 20-30 minutes during a trading day is an alternative for trading time and usually helps me relax. But, if you find any other activity that helps get your mind clear, then do it. Hence, you need to find something you like, put it in your trading room, and add it to your daily routine. 

6. A Good Mobile Phone

From my experience, you can also successfully trade from your mobile phone, especially when mobile trading applications have become so good in recent years. There may be a few professional trading apps like the MT4 that allow you to track the forex market (as well as other markets) from your mobile device, view charts, news feed, technical analysis tools, etc. Further, you can easily place orders in the market from your mobile phone and get instant market execution. 

As a matter of fact, I even know some swing traders and long-term investors, claiming that sometimes it’s even easier to trade directly from a mobile device (although you can’t really day trade from your mobile phone). After all, there are lots of benefits of mobile trading app – you can trade on the go and easily get market alerts and updates to your phone. 

And, even if you are not going to day trade from your mobile phone, intraday trading is addictive. You have to check the markets at any given moment and monitor your account as much as you can. In some cases, you might have to enter your mobile app several times a day to change orders, buy or sell an asset, analyze the markets, etc.

All things considered, you also need a really good mobile phone as part of the perfect setup for day trading. 

The Bottom Line

There’s a high probability that the first image you had in mind when you decided to become a day trader is to sit in front of 7-8 trading screens, get access to top-notch trading platforms, and make thousands of trades per day.  So, in order to get the ball rolling, you need to get the necessary tools and platforms to make the best setup for your trading business. 

Apart from what we’ve mentioned above, you also need to get other essential tools and services including a trading desk or table, high speed internet connection, ergonomic chair, etc. For your convenience, it is also recommended to choose the platform theme (dark or light), and get access to a good economic calendar/news source/trading signals provider. 

TIP

Remember, day trading is a hard job. You need to clear your mind between a trade to trade during the trading day. This means you can add something you like as part of your day trading routine – play bubbles on your phone, read a book, watch TV, visit social media platforms, listen to music, or anything else that makes you feel like you want to go back to the battlezone. 

At last, bear in mind that there’s no one way to do it – some people prefer a minimalist approach with just one laptop, one chart, etc. Others are much more confident in an abundance of information. It would be best for you to start with the basic tools and services we mentioned above and find your way as you go through the first months of your trading journey. 

How to Start Commodity Trading: A Beginners Guide

Nowadays, commodity trading is no longer available only to farmers, manufacturers, and governments. Any individual trader with an internet connection can speculate on the price movements of commodities via futures contracts or CFDs. 

However, although the process of getting access to the commodity market is fairly simple, you still must understand all the fundamental aspects of these commodity instruments – how they work, what to follow, what are the basics of commodity trading, and what are the most traded commodities out there. 

What Exactly is Commodity Trading?

When you buy different products at a grocery store, you most likely do not contemplate how these materials reach your local store. Normally, the process starts at a commodity exchange where various commodities are traded and sold to retailers. And, these commodities are basically raw materials that can be traded on the commodities markets like any other financial instrument. 

Historically, the first commodity futures exchange dates back to 1730 when two sides exchanged rice futures. Then, in 1864, the first futures trade was listed on the Chicago Board of Trade (CBOT) when two parties exchanged grains futures. Since then, future contracts have become an integral part of global trade and a popular way for traders to speculate on commodity prices. 

What is the Purpose of Commodity Futures Contracts?

The purpose of commodity futures contracts is to protect farmers and grocery retailers from unexpected price fluctuations. For instance, with a futures contract, a farmer can assure a certain price at which the crop will be sold and vice versa. Additionally, futures exchanges also create big global marketplaces where buyers and sellers can send and receive commodities. In fact, some commodities futures contracts are deliverable, which means you must collect your cargo from the port at which it is registered on the contract. If you do not do that, you must pay very high fees for the port for each day the cargo stays there. 

But for the individual trader, commodity trading works pretty much the same way as trading on any other market. It involves the buying and selling of a wide range of derivative instruments to predict the future prices of commodities and make speculative decisions.

FYI

As of 2021, there are 121 future exchanges in the world. Since 2019, the National Stock Exchange of India (NSE) is the largest futures exchange in the world, followed by the Chicago Mercantile Exchange (CME).

Commodity Trading  – Futures vs CFDs

Nowadays, as the markets have significantly evolved, there’s typically more than one way to trade a certain market. So, much like other markets, commodities can be traded in three ways – trading physical commodities, trading futures contracts via an exchange, or trading CFDs via online brokers. As we assume you are not planning to physically buy cargos of crude oil or corn, that leaves us with two options – Future contracts and Contract for Difference (CFDs). 

In the commodity markets, CFDs and futures offer traders very similar products, which makes a bit of confusion for traders on what form of contract is better for them to use. Generally, both CFDs and futures are derivative products that replicate the price of the underlying commodity asset and can be traded with leverage and other benefits. Still, there are notable differences between the two and each type of trading is more suited for different types of traders. 

Liquidity 

The primary distinction between commodity futures and CFDs is in liquidity. Futures trade on the exchange where many participants including farmers, producers, hedge funds, and speculators buy and sell commodity futures and create liquidity in a certain market. However, very often when you trade futures (especially futures with distant expiration dates), you’ll find yourself in a liquidity trap where there are no buyers or sellers. 

CFDs are traded directly with brokers that ensure you get an execution at any given moment. Consequently, you won’t have any issues getting in and out of positions. 

Best to Trade With – CFDs

Range of Commodities

Although CFD brokers have been widening their selection of products in recent years, it is not yet possible to get access to the full range of commodity products. Normally with a CFD broker, you get access to 10-20 commodities. 

When trading futures contracts via the exchange, you actually get access to all futures contracts traded on the exchange.  In that aspect, many traders take advantage of futures spreads on the same asset – meaning buying one contract with a certain expiration month and selling the other with a different expiration month. It is a great trading strategy that enables traders to lower the risk and essentially trade the spread between two different contracts (this strategy is especially effective with seasonal commodities such as grains, energy, etc). 

Best to Trade With – Futures

Initial Deposit Required to Start Trading 

Futures are physical and deliverable financial contracts, and usually, the size of the contract does not enable small investors to trade it. In most cases, futures brokers require investors to deposit somewhere between $5000 to $10,000 in order to be able to open a trading account. There are also high margin requirements due to the complexity of futures contracts. 

Still, trading commodities via an exchange comes with some benefits. Future exchanges need liquidity to provide a functional market, and as a result, active traders that trade higher volumes are compensated with monthly rebates and generally pay low fees. 

On the flip side, CFDs are more flexible simply because these contracts are sort of a derivative of a derivative. For this reason, opening a CFD trading account does not require a high initial deposit and most brokers offer to start with a few hundred dollars. Also, there are no fixed fees nor exchange fees. Instead, you pay the spread and an overnight fee. 

The bottom line is that it depends on the budget you have and the type of trader you are. 

Best to Trade With – CFDs/Futures

Account Creation Process

Another thing to consider is the account creation process. In this aspect, it is important to understand that a futures contract is an agreement between the buyer and seller to deliver a commodity (physical or cash settlement) at a certain date, location, and price. Therefore, when you open a futures contract account, you’ll have to go through a fairly long process of delivering your details, bank accounts, verifying your identity, and providing your purpose of trading futures. 

To trade CFDs, you’ll need to sign up, open an account with your chosen CFD broker and meet the minimum deposit requirement provided by the CFD broker. The process is much easier when compared to opening an account with futures contract brokers and can usually be completed in 1-3 days.  

Types of Commodities

Commodities are categorized into four types of categories. These can be classified as hard and soft commodities with the difference between the two is that soft commodities are grown or produced and hard commodities refer to any commodity that must be mined or extracted. With that in mind, here are the four types of commodities:

  • Metal Commodities (Hard) – These include gold, silver, copper, aluminum, platinum, palladium, Zinc, and Tin. 
  • Energy Commodities (Hard) – Includes WTI crude, Brent crude oil, natural gas, gasoline, heating oil, kerosene, ethanol, and coal. 
  • Livestock and Meat Commodities (Soft) – Includes live cattle, lean hog, feeder cattle, port cutout, and milk. 
  • Agriculture Commodities (Soft) – Includes wheat, corn, soybean, soybean oil, soybean meal, rice, cocoa, coffee, sugar, cotton, orange juice, wool, lumber, oats, and canola. 

FYI

The most popular commodity index funds include the S&P Goldman Sachs Commodity Index (S&P GSCI) and the Commodity Research Bureau (CRB) Index Index.

What Are the Most Traded Commodities in Financial Markets?

Commodities are vital components of our daily lives and to the development of the global economy. Some commodities have been in demand for centuries while others are trapped in a cycle of demand. For instance, the demand for aluminum jumped 48% this year which resulted in a significant increase in aluminum price. 

Another commodity that has been in the headlines over the last year is Uranium. So far this year, the price of Uranium jumped by more than 50%, largely due to the growing demand for Uranium in clean energy facilities and the inability of uranium producers to meet the demand

Below, you can find the top ten most traded commodities in the world as of 2021:

  1. Crude oil
  2. Coffee
  3. Natural Gas
  4. Gold
  5. Wheat
  6. Cotton
  7. Corn
  8. Sugar
  9. Silver
  10. Copper

FYI

The London Metal Exchange is the largest exchange market in the world for precious metals such as gold, copper, silver, lead, tin, and zinc. It is estimated that the total volume per year on LME is around $12 trillion.

What Events and Market Data Impact Commodities?

Like any other market, commodity prices are influenced by market news and data. At times of reports or news, commodities tend to respond to changes in supply and demand and to expectations of economic growth or recession. 

That said, the case here is a bit more complicated than in other markets. After all, some of the commodities are niche markets and you need to find the reports and data that have an impact on commodity prices. Obviously, the data and market you need to follow also depend on the product you decide to trade. 

Nonetheless, here are some of the main reports and data you need to follow to get an insight into the supply and demand of different commodities in the market. 

  • API Weekly Report (Crude oil, and petroleum products) – Published every Tuesday at approximately 4:30 pm ET.
  • Crude Oil Inventories Report by EIA (Crude oil, and petroleum products) – Published every Wednesday at 10:30 am ET.
  • Weekly Natural Gas Storage Report by EIA – ​​Published every Thursday at 10:30 am ET
  • OPEC Monthly Oil Market Report (Oil and petroleum products) – Published every month around the 12-15
  • The Commodity Futures Trading Commission (CFTC) Commitment of Trader Report (All commodities)  – Published every Friday at 3:30 pm ET
  • World Agricultural Supply and Demand (Soft commodities) – Published on the 10th of each month. 
  • USDA Crop Reports (Soft commodities) – Published on a weekly, quarterly, and yearly basis.

How to Start Commodity Trading?

As we mentioned previously, there are essentially two ways to get into commodity trading. The first way is to find a broker that gives you access to futures contracts that trade on the exchange. Clearly, there are major advantages of trading commodities via the exchange including access to a level 2 order book, and the ability to trade multiple futures on the same commodity with different expiration dates. For example, many traders will utilize futures spread, which is a technique in which a trader buys one contract of a certain commodity and sells the other future contract with two different contract months (e.g. – buying wheat May contract and selling Wheat December contract). 

Bear in mind, however, that for opening a futures investment account the majority of brokers require minimum deposits that range between $5,000 to $10,000. In addition, when trading futures contracts, you need to take into consideration fixed trading fees and exchange fees. 

Alternatively, you can find an online CFD broker that allows you to speculate on the price movements of commodity products. Here, at SwitchMarkets, we offer users to trade the most popular precious metals and energy products. These include Gold, Silver, Brent Crude Oil, WTI Crude Oil, and Natural Gas.

FYI

Crude oil is the most traded commodity in the world, with coffee as the second most traded commodity in the list. Wheat is the most traded grain commodity in the world.

Conclusion

As a former commodity trader, I must admit that the commodity market is my favorite one of all. Understanding the political factors that impact commodity prices is fascinating and could help you realize why some countries have close ties. The United States and Saudi Arabia, for instance, signed the famous Petrodollar agreement in 1973 that obligates Saudi Arabia to accept the US dollar as the one and only currency for pricing and settlement of oil exports. In return, the US has guaranteed to offer military protection to Saudi Arabia. So, clearly, the relations of these two countries have a huge impact on oil and petroleum products. 

What’s more? The Chinese are the biggest importers of crude oil and… guess who are the biggest exports? The United States and Saudi Arabia. It is therefore not surprising that the Trade War between the US and China has a direct impact on oil prices. Another example – Egypt is the largest importer of wheat while Russia, the US, and Canada are the largest exporters. So, these countries typically maintain close relations due to their need to buy and sell wheat. 

Generally, prices of commodities tend to move in the opposite direction of the stock market and the US dollar. The vast majority of commodities also tend to move together, partly due to their role as safe-haven assets and being vital materials for human existence.  

The bottom line, if you are a big fan of international relations and political economy, trading commodities could be the right place for you to start. It is an exciting market that offers lots of trading opportunities and huge potential to make profits. 

FAQs

How to get into commodity trading?

There are several ways to get into commodity trading. You can open an account at a broker that gives you access to a future exchange or find a CFD broker that allows you to speculate on prices of commodities with high leverage. Another way is to invest in commodity stocks or find commodity ETFs. But regardless of the way you choose to trade commodities, you need to learn what are the main factors that impact commodity prices, the pricing of each contract, and the key data that is being released and provide information about the asset you decide to trade.  

How to trade bitcoin futures on CBOE?

According to the CFTC, bitcoin is classified as a commodity, which means that you can trade bitcoin futures on the CBOE. Another way to trade bitcoin futures is via CFDs. 

What’s the best commodity for intraday day trading?

Fundamentally, any commodity that you will choose to trade can be traded intraday. However, for that purpose, you want to choose an asset that is liquid, volatile, and is widely covered in the mainstream media. Therefore, some of the best commodities for intraday trading include crude oil, natural gas, gold, and silver.

Is commodity trading good for beginners?

For beginner traders, commodity trading might be easier than the stock market as it does not require in-depth research and the picking of different financial instruments and stocks to trade on. Instead, it is a classic case of supply and demand, hence, you need to focus on one commodity, follow the important data that is being released on a weekly/monthly/quarterly basis, and understand the factors that impact commodity prices. 

Where should I start learning about commodity trading?

There are lots of courses online and free videos you can find on YouTube about commodity trading. Besides that, it could be very useful to open a free demo trading account and start trading with virtual money. This way, you can learn how to use a trading platform, find the commodities to trade on, and understand the price structure of each commodity. 

How to Trade Natural Gas: Key Data to Watch

Being one of the most traded commodities in the world, Natural Gas is a great asset for day and swing trading. It is far more volatile than crude oil and other petroleum-based products and is liquid enough so investors can easily place orders and get instant market execution. 

Once you have realized natural gas trading basics, the only thing you need to ensure you know before starting trading natural gas is what key data and reports to follow. So, in this article, we’ll mention the most important reports and data you need to watch that affect natural gas prices.

Key Points to Take Away

  • Natural gas is one of the most vital sources of energy in the world and is a popular asset for day trading.
  • There are five reports and data announcements that affect natural gas prices. These include the EIA Weekly natural gas storage report, Natural Gas Imports and Exports, EIA Natural Gas Storage Dashboard, OPEC Monthly Oil Market Report, and Baker Hughes Drilling Report of Active Rigs.
  • Other crucial factors that impact natural gas prices include seasonality, extreme weather conditions of heat and cold, storage, and increased demand due to global economic growth.

First, What Are The Ways to Trade Natural Gas?

Basically, there are two ways for individual investors to actively trade natural gas. The first way is through futures contracts traded on futures exchanges – those include the Henry Hub Natural Gas futures that trade on the New York Mercantile Exchange (NYMEX), which is now owned by Chicago Mercantile Exchange (CME Group), and the UK Natural Gas futures that trade on the Intercontinental Exchange (ICE). 

While trading futures is a way to get exposure to natural gas markets, it must be noted that the requirements to open an account are quite strict and the tick value is worth $10. This makes it a relatively heavy contract for average traders as the price of natural gas futures contracts fluctuates in sizes of $0.001. Additionally, the CME has recently added the e-Mini Natural Gas futures with a minimum price fluctuation of $0.005. However, while the cost of trading the e-Mini natural gas contract is lower, the tick value is higher at $12.5.

Another factor to consider in the case of futures contracts is the margin requirements. The vast majority of futures brokers usually require an initial margin requirement of around $1600 and a maintaining requirement of around $1400.  The bottom line, while there are many advantages to trading natural gas futures, the process is quite complicated and unless you have a large initial amount of money to start trading, it is certainly not the most preferred option. 

The second option, CFDs, on the other hand, requires a fairly simple process of account creation and low initial deposit requirements. Because natural gas is such a popular commodity, many CFD brokers including SwitchMarkets offer traders this option. 

Generally, natural gas CFDs enable investors to speculate on the price movements of natural gas. However, unlike futures contracts, when trading CFDs, it can be done without taking any ownership of a physical commodity underlying asset. This basically means that you’ll be able to trade with leverage and utilize a small amount of capital to open positions. For example, SwitchMarkets allows users to start trading natural gas with an initial deposit of just $50, and a leverage ratio of 50:1.  

Fun Fact

Not many people are aware of the fact that natural gas is the cleanest burning fossil fuel – even more than burning woods. 

5 Reports and Data That Affect Natural Gas Prices

Much like any other commodity in the world, there are several natural gas reports being published for the public. The reports are there to provide supply and demand information for producers, importers, and day traders, mainly due to the huge role of natural gas in our society. 

With that in mind, below you can find some of the most important data to watch if you are trading natural gas: 

1. EIA Weekly Natural Gas Storage Report

The most important report to watch is most likely the Energy Information Administration (EIA) Natural Gas Storage report. Basically, it measures the gas storage in the United States, which is the largest producer and the largest consumer of nat gas in the world.

The EIA weekly natural gas storage is released every Thursday at 10:30 a.m. EST (15:30 GMT).  To follow natural gas EIA reports, you can visit the EIA website or follow the data on our economic calendar.

2. Natural Gas Market Imports and Exports

Another extremely important report is the Natural Gas imports and exports quarterly report that is being released by the Office of Fossil Energy and Carbon Management. The report obviously has a significant impact on natural gas prices in the US, so watching the report and knowing the time of release is crucial for natural gas traders. 

Additionally, you can find the last natural gas imports and export report for the second quarter of 2021

3. EIA Natural Gas Storage Dashboard 

The EIA natural gas storage dashboard (DOE) is perhaps the most comprehensive report of all, especially if you wish to deeply analyze natural gas storage status and other crucial factors.

natural gas storage

4. OPEC Monthly Oil Market Report

Another report to watch is the OPEC oil market report that is being published monthly, usually between 11-15 of the month.  

The report covers all issues impacting oil market trends around the world, including the monthly OPEC output, natural gas liquid demand and supply, etc. 

To find all the OPEC reports and the publishing schedule.

5. Baker Hughes Drilling Report of Active Rigs

Baker Hughes Drilling Report of Active Rigs is a weekly report released at noon Central Time on the last day of the workweek. It is an important indicator for oil and natural gas as the active rig count indicates the demand for products used in drilling in the United States and Canada. 

To find more information read the full monthly oil market report.

*In addition to the above, it is also highly recommended to visit the EIA natural gas weekly update that includes plenty of information including natural gas production, weather transportation, storage, weekly chart, etc. It is a summary of the natural gas industry and shows the latest news that relates to natural gas and other energy products. 

Other Factors That Impact the Price of Natural Gas

Generally, there are several factors that drive the price of natural gas. These include:

  • Seasonality
  • High demand and low supply 
  • Weather events
  • Natural Gas storage
  • Energy technological improvements
  • Development of green energy
  • Geopolitical Events in the leading importing and exporting countries. The largest LNG producing countries include the United States, Russia, Iran, and Canada. In 2020, leading exporting countries include Qatar (16.2%), United States (15.5%), Australia (12.7%), and Norway (6.4%). Top importing countries include Japan (21%), China (19%), South Korea (11%), and India (N/A). 
Natural Gas Top Importers and Exporters 2021

The Bottom Line

Clearly, natural gas is one of the most vital resources of energy in the world. According to the EIA, it was the largest source of US electricity in 2020, with around 40% of the total US energy consumption. It also accounts for about 23% of global energy demand.

Being such an important source on the planet, it does not come as a surprise that there are several reports and data to watch if you are planning to trade natural gas. The reports above will help you to analyze natural gas markets as part of your trading strategy and take trading actions in the markets. 

FAQs

What does LNG stand for?

LNG stands for liquified natural gas and is a state in which natural gas has been converted to a liquid form for the ease of natural gas transport. 

How to trade natural gas reports?

To trade natural gas reports, you first need to make a schedule of all the reports that affect natural gas prices. Then, try to find out how each result impacts natural gas prices (preferably on a demonstration account), and use technical analysis tools to determine entry and exit points. 

What is the trading symbol for natural gas?

Generally, the trading symbol for the natural gas spot market is NG. For natural gas futures contracts, the trading symbol varies depending on the expiration month (NGZ1 for December, NGF2 for January, NGG2 for February, etc)

What is the Henry Hub?

Henry Hub is a famous natural gas pipeline located in Louisiana, United States, and is the most well-known trading point for natural gas deliveries. For that reason, the natural gas futures contracts on the CME are called the Henry Hub Natural Gas futures. 

What is the best natural gas ETF?

Apart from the methods above that include futures contract and CFDs, a trader can also trade gas ETFs via the stock market. This way, you benefit from investing in a basket of companies that provide natural gas services. Some of the best ETFs include the ProShares Ultra Bloomberg Natural Gas, ProShares UltraShort Bloomberg Natural Gas, and the United States Natural Gas Fund LP.