Taking The Loss In Natural Gas

Natural Gas $UNG was a weekly breakout trade that we initiated long back on October 7th, 2016.


We took our entry as price surged above multi-month resistance of 8.75 and closed strongly on the week and saw a nice expansion in range.

We had some initial follow through the next week, but not enough to tag our first profit target which was roughly $10.


Over the next two weeks, price retraced lower, re-testing our original breakout level and then suddenly gapped lower to start the day on October 25, 2016 by more than -4%, falling back into the old multi-month summer range.


The acceleration lower via the  gap down was enough to stop us out of this trade as the breakout we were playing was no longer in motion.

Despite the multi-week weakness, bulls still dominate this time-frame but at the very least, it looks like they’ll need more time moving sideways before making another upside attempt.

The progression of this trade is very standard for trading breakouts and represents the typical losing trade that we see.

Keeping losses small, staying objective, and moving on when price suggests that we should is what’s important.

You can learn more about our trading process here.

Thanks for reading and happy trading.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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