Natural Gas: Another Win for Commitments of Traders Data

I don't want to jinx myself, but it looks like tomorrow's open of trading will bring another profitable trade for my natural gas setup based on the weekly Commitments of Traders reports. (See my latest signals table for more details on my signals this week.)

This setup is without doubt the star of my COT setups. Anyone who doubts whether this free data from the CFTC has any value can just take a look at the results from trading the natural gas data with my signal. Since June 2009, it's returned 93 percent (not including my current short position, which closes on tomorrow's open), while natural gas itself has fallen 28 percent.

That's based on a good sample of 31 trades, 24 of which were profitable (a 77-percent batting average). The average trade has lasted 2.4 weeks, which means I was in the market about 70 percent of the time.

I'm always curious to see how natural gas moves during my positions. Using technicals, I would have almost never placed trades at the same spot as the COT data tells me to. In fact, the price sometimes moves strongly against the position at first.

The latest trade is another example. My short position started on July 23, and the first week saw the signal lose money as gas pumped higher as part of its rally since mid-June. It even broke out on the daily chart through a couple of Tom DeMark Setup Trendlines, meaning I might have gone long.

But the last two weeks have seen a serious selloff, and the trade is now up 12 percent in three weeks using the 200-percent leveraged HND fund in Toronto. (The UNG fund in New York is down 8.6 percent.)

Hopefully my other recently revised setups will do as well! The jury's still out right now, and it took me about two years or more of trading with my gas setup for me to see a consistent pattern in the returns.

Gas goes to cash on Monday's open, and there are no other trades taking effect next week based on my COTs Timer system. Good luck this week!

Monday morning update: After today's open, my HND trade ended with a 12.6-percent gain, making my total return for this setup in the past three years 105 percent with 25 profitable trades out of 32 (a 78-percent win record) - knock on wood!

It's not to gloat. I know the setup could stop working tomorrow, and my other setups don't do nearly as well. But it gives me inspiration to think I could replicate these results in other markets using the COT data, and that's what I tried to do when I revised my other setups recently. Good luck again this week.