Getting Started with Binance Futures Natural Gas Trading: How to Play NATGASUSDT

Natural gas is something that I don't feel comfortable with when it comes to boiling water and cooking, but it's quite temperamental when it comes to the trading market. Cold waves in winter, heat waves in summer, LNG shipping schedules, geopolitical conflicts, any news can make prices jump up and down. In the past, if you wanted to participate in natural gas trading, you either had to open a special account in the traditional futures market, or the capital threshold was prohibitively high, and you had to keep an eye on the exchange's business hours. Now Binance Futures has moved natural gas to the USDT perpetual contract, code NATGASUSDT, and USDT is used for settlement. There is no need to worry about storage and transportation, and the transaction price is purely volatile.

Let’s take this contract apart first. NATGASUSDT tracks the Henry Hub benchmark price, the benchmark for U.S. natural gas pricing. Each contract represents 1 million British thermal units (MMBtu) of natural gas, but you don’t hold the physical object, and profits and losses are settled in USDT. If you think the price is going to go up, go long, if you think the price is going to go down, go short, it's that simple. Leverage can reach up to 100 times, which sounds exciting, but 100 times leverage means that if the price moves in the opposite direction by 1%, your margin will be gone. So don't just look at the leverage ratio, first think about how much drawdown you can withstand.

Compared with traditional commodity futures, this contract on Binance has several obvious differences. Traditional markets are closed on weekends, and if there's any big news on Friday night, you have to wait until Monday. Binance futures can be traded 24/7, and you can react immediately if you see a cold wave warning in the middle of the night. The threshold is also low. You don’t need to find a special broker. You can open a position if you have USDT in your account. Although leverage is also available in traditional futures, it is more convenient to open leverage on Binance. Under 10x leverage, a 10,000 USDT natural gas contract can be controlled with a margin of about 1,000 USDT. However, leverage is a double-edged sword. If 20 times leverage encounters a 5% adverse fluctuation, the position will be lost.

There is an unavoidable concept in perpetual contracts: the funding rate. It is not a handling fee charged by the exchange, but a sum of money that the long and short parties pay each other every four hours. When the rate is positive, the longs pay the shorts; when the rate is negative, the shorts pay the longs. This mechanism pulls the perpetual contract price up toward the spot price to prevent it from deviating too far. The funding rate of NATGASUSDT is settled every four hours. You can check the real-time and historical rates in the [Data] tab of the Binance futures page. If you hold the position in the wrong direction, the money will slowly eat up your profits, so take a look at the fee rate before opening a position to avoid being deducted accidentally.

The risks must be explained clearly. Natural gas volatility ranks high among commodities. Weather, U.S. production, LNG export flows, geopolitics, and the weekly EIA inventory report can each cause violent fluctuations. Leverage magnifies gains as well as losses. Under 20 times leverage, a 5% reverse fluctuation will result in liquidation of the position. This is no joke. So before placing an order, think about it: Where is the stop loss? How big is the position? How much leverage should I use? Many people liquidated their positions not because they read the wrong direction, but because their positions were too heavy and the leverage was too high. A normal correction would wash them out.

The specific operation process is not complicated. Log in to Binance, go to the [Contracts] page and select the USDⓈ-M contract, or search for NATGASUSDT directly on the homepage. After finding the trading pair, first look at the contract account balance in the lower right corner. If you have no money, you can use transfer, buy coins or flash deposit to make a deposit. The first time you use a contract account, you may need to take a small test. Just follow the prompts. Select buy or sell on the order panel, and then select the margin mode: in the cross position mode, the entire contract account balance is used to cover the order, and a loss in one position may affect other positions; in the isolated position mode, the risk is isolated in a single position, and the position will be automatically closed after the margin of this position is lost, without involving others. Beginners are advised to use isolated positions first, so that they can at least have an idea of ​​how much they will lose. After placing an order, you can see the positions, current orders and historical orders at the bottom, and you can monitor the market and make adjustments at any time.

One last word: Natural gas contracts are not a sure-fire tool for making money. They are highly volatile, highly leveraged, and can lose money quickly. Before trading, read the contract rules, funding rates, and liquidation prices clearly, and don’t gamble with your living expenses. Binance Academy also reminds you in the original article that this contract may not be visible in different regions due to regulatory reasons. After logging in, go to the contract page to confirm.

Reference: Binance Academy https://www.binance.com/en/academy/articles/how-to-trade-natural-gas-natgasusdt-on-binance-futures

Transaction fees, VIP levels and rebate conditions may change, please refer to the exchange account page and CoinRebate's latest rate page. This article is for educational purposes only and does not constitute investment advice.