Today I’d like to go into the story of my first (and fortunately my only) big loss. Yesterday I opened a position in DGAZ in advance of the EIA weekly storage report being down from last week. Unfortunately I had not realized that analysts had anticipated worse than this, and so the price of natural gas spiked, immediately sending my position into a nose dive.
By the end of the day it was down nearly 8%, and based on longer term value assessments of DGAZ I decided to wait it out. The next day it opened 5% up, and my losses were dramatically lessened. I made the decision to close, 3% down and somewhat shaken by my first negative encounter with a highly leveraged ETF.
By the end of that day my position would have been down 12% so I am somewhat pleased that I made the best of a bad situation, but I am disappointed that I missed a fact that everyone else saw. In the future when trading with DGAZ I will place a hard limit order as an exit strategy, as my queued order wasn’t able to execute fast enough to get me out as the price dropped.