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Opinions3 hours ago· 5 min read

My First Big Loss: How Natural Gas Trading Taught Me Everything

I blew up my first account on a single Nat Gas trade. It was the best $30K tuition I ever paid. Here's the setup, the mistake, and the lesson.

I still remember the smell of the old Chicago trading floor. Sweat, stale coffee, and paper. Lots of paper. This was before everything went silent and electronic in 2015. Back then, you could feel the market. And one day, I felt it punch me square in the jaw. Everyone has a story about their first big loss. Mine was a $30,000 hit on a natural gas trading setup that seemed like a sure thing. It wasn't. But looking back, it was the best tuition money I ever spent. It taught me a lesson that no book or seminar ever could.

They call natural gas the 'widowmaker' for a reason. Its volatility is legendary. For a young, cocky trader, that volatility looked like opportunity. It was late fall. The classic seasonal play was on. Storage reports were coming in tighter than expected, and the long-range forecasts were calling for a brutal winter. Every headline screamed 'buy'. My thesis was simple: a cold winter would drain inventories and send prices to the moon. The commodities market outlook was bullish across the board, and I was ready to ride the wave.

I saw the front-month contract, NGZ11 (December 2011, for you history buffs), coiling on the daily chart. It was a beautiful technical setup confirming my fundamental bias. I felt like I couldn't lose. That's always the first warning sign, isn't it? When you feel invincible, you're about to get humbled. My entire focus was on the entry. I barely gave a thought to the exit.

I went long. And not just long, I went big. Too big. I leveraged my entire small account into a handful of contracts around the $3.80/MMBtu level. My position sizing was based on greed, not math. I saw dollar signs, not risk. It was the polar opposite of the disciplined, rules-based approach that someone like Jake Morrison applies to his equity trades. My strategy was 'bet the farm and pray for snow'.

The market doesn't care about your thesis. A few days after I entered, the weather maps changed. An unexpected high-pressure ridge parked itself over the eastern U.S., bringing unseasonably warm temperatures. My 'brutal winter' thesis evaporated in a 60-degree November haze. The price didn't just dip; it fell off a cliff. It gapped down through $3.60, then $3.50. I was frozen. I told myself it was a shakeout. I held on. I even thought about adding more. The margin call email was the final nail in the coffin. Account blown. Game over.

***

Staring at a zero balance forces you to get honest. The market didn't take my money; my ego did. My lack of a plan did. That loss burned four rules into my brain that I live by to this day.

Risk First, Profit Second: Your position size is your primary defense. A great idea with terrible risk management is a losing trade.
Respect the Catalyst: In Nat Gas, the weather is king. You can't just read the supply reports; you have to check the damn weather maps every single morning.
Know Your 'Out' Before You Get In: A trade without a stop-loss is just a hope. My stop-loss was a margin call. Never again.
Fundamentals Can Change Instantly: Your beautiful thesis can be invalidated overnight. You have to be ready to kill your darlings.

This experience fundamentally changed my view on risk. It's something I see missing in the crypto space all the time. Traders get so caught up in the narrative they forget to manage the downside. It's a psychological trap that Emma Blackwood covers well in her writing on market sentiment. They fall in love with the story and forget they're playing with real money.

The market is a ruthless teacher. It gives you the test first and the lesson afterward. My first F- grade cost me thirty grand, but it made me a professional.

— Viktor Reyes

Now, my approach is layered. I still look at seasonality, but I filter it through geopolitical lenses—like how the latest OPEC production cuts impact LNG demand from Europe—and I cross-reference it with weekly storage data from the EIA. My risk is always defined to the tick before I press the button. That blown-up account was my phoenix moment. It burned me to the ground, but a real trader rose from the ashes. It's a painful rite of passage, but a necessary one.

So, what was the trade that taught you your most expensive—and valuable—lesson?