I have an opportunity to trade natural gas futures for a publicly traded company. Right now I am in Fund Accounting and I have been trying to get a job as an analyst. I guess the route I was hoping to take is become a reasearch analyst and eventually a portfolio manager, but now that this has came up it got me thinking. Would trading natural gas futures count toward the CFA work experience? Would I be dealing with the stock market at all? Do they trade on technicals, fundamentals or both?? I have taken the first 2 levels of the CFA exam.
I can’t imagine that trading natural gas futures on behalf of an entity that’s an end user (I’m assuming that the company you’re talking about isn’t just a trading company) would involve using technical analysis. Why would you think you’d be dealing with the stock market if you were trading natural gas futures?
Well, I think in a way you have to think about stocks as well esp of natural gas producers.You need to understand supply and demand, the cost structure, capex, potential new projects…etc
I think some of those would be things that might drive or underly stock valuations in addition to being relevant for a natural gas trader, but I wouldn’t think that such a trader would be “dealing with the stock market” itself at all.
well you are right, but at least Highball will get closer to the fundamentals of some companies. you will not buy natural producers stock thinking that the price is going to slash
Alternative Investments definitely do count. Read the news, futures are being blamed for the runup last year that saw oil go from 60 to 147 and back. You dont that had an impact on the economy and stocks? I can’t believe that these guys are telling you otherwise. As well, Fund Accounting contributes to the investment management process, its part of reporting & analysis which allows portfolio managers to see where they can improve performance.
Read my posts again. The guy (or woman) is considering trading natural gas futures. Prices of commodities (like natural gas) may (in fact surely do) have an effect on stock prices, but I don’t think it works the other way around - stock prices don’t impact natural gas prices, at least not at all significantly. How could it be of any value to someone trading natural gas futures to follow what stock markets are doing?
^Agree Natural gas producers’ stocks will be dictated by the commodity price. Also, natural gas prices will be in the shitter for the next few years (compared to the peak) but today’s low price isn’t sustainable…
Another thing is that if you are in a trading role, you will most certainly be basing most of your decisions on technical data. Yup, you will be sitting in front of a screen analyzing charts all day and your trades will likely be very short. Technical analysis by its very definition doesn’t care about fundamentals. In most well run companies, the people formulating the strategies is different from the ones who actually trade. Thus, the strategy has already been thought out by the time you are instructed to trade. Althought this may not land you an equity analyst role immediately, you can easily land a trader role. Traders don’t have the brutal hours and make comparable pay, even more in strong markets. But there is no reason in the world why a firm wouldn’t hire you as a research analyst covering natural gas/oil companies, given how important futures markets are to these firms’ profitability. I’d say go for it, it can only help.
Captain Windjammer Wrote: ------------------------------------------------------- > Read my posts again. The guy (or woman) is > considering trading natural gas futures. Prices > of commodities (like natural gas) may (in fact > surely do) have an effect on stock prices, but I > don’t think it works the other way around - stock > prices don’t impact natural gas prices, at least > not at all significantly. How could it be of any > value to someone trading natural gas futures to > follow what stock markets are doing? You are probably right about natural gas but that’s definitely not the case with oil. Currently oil prices are highly correlated to stock prices. If we stay in a recession, stock prices will go down and oil prices will go down due to lower demand. In case of recovery both stock prices and oil prices will go up. During normal times relationship between stocks and oil is negative because oil is a production input.
There may be a correlation, but is there a causal relationship? Would it really make sense for an oil trader to follow stock markets to try to determine what oil trades to make? Other than in a general way I mean. Seems doubtful to me.
Captain Windjammer Wrote: ------------------------------------------------------- > Would it really make sense for an > oil trader to follow stock markets to try to > determine what oil trades to make? I think that would be the most important factor at least for a while.
Why in the world would that be?
Because stock market is one of the best indicators of recovery/recession expectations.
Thus the “Other than in a general way I mean” in my post above. Obviously it would seem useful for an oil trader (or probably most any trader of anything) to bear in mind what stock markets might be indicating about the future direction of the economy (to the extent they are good indicators of that), but you wouldn’t follow events in the market on a daily basis to try to determine that. I can’t imagine anything more than that vis a vis equity markets would be useful for an oil trader.
I agree with you. Which markets do you trade?
None; I own a portfolio of index funds and don’t trade at all except to rebalance. I wouldn’t be adverse to trying my hand at trading something if someone wanted to pay me to do so on their behalf, although I wouldn’t have much confidence in my ability to make it worth the cost and effort (on an absolute basis at least - I’d have enormous confidence in my ability to do better than others at it).