thoughts on commodities trading as a career.. have a couple questions
Looking at commodities trading as a future career.. just getting out of college. Have a couple of questions.
Does flow trading still have a future or will it likely be replaced by electronic trading? Do you have to be a comp sci/quant to succeed in this career?
Do you find the work intellectually stimulating?
What is the exact day-to-day of an entry-level analyst. I can't really find a true answer to this?
In flow trading if you are simply just executing trades for people what is the skill to this? What is the nuance? What makes some better at this than others?
Ah, diving into the world of commodities trading, are we? Let's peel this banana and see what insights we can find based on the most helpful WSO content.
Does flow trading still have a future, or will it likely be replaced by electronic trading? Do you have to be a comp sci/quant to succeed in this career?
Flow trading, especially in commodities, has been evolving with the advent of electronic platforms, but it's not going extinct anytime soon. The blend of human insight and electronic efficiency seems to be the way forward. While electronic trading has increased, there's still a significant value placed on the human element - understanding market sentiment, navigating complex trades, and building relationships. You don't necessarily have to be a comp sci/quant to succeed, but having a strong analytical background can give you an edge. It's more about your ability to understand and predict market movements, manage risk, and make decisions under pressure.
Do you find the work intellectually stimulating?
Based on insights from those in the field, commodities trading can be highly intellectually stimulating. It's a dynamic environment where you're constantly analyzing various factors that could affect the markets - from geopolitical events to weather patterns. It requires a keen understanding of both the micro and macroeconomic factors at play. Plus, the challenge of making profitable trades under uncertain conditions can be quite the adrenaline rush.
What is the exact day-to-day of an entry-level analyst?
The day-to-day of an entry-level analyst in commodities trading can vary widely depending on the firm and the specific role. Generally, you might start your day reviewing market news and price movements, followed by preparing reports and analysis for senior traders. You could be involved in developing trading strategies, managing positions, or even in client-facing roles, providing market insights. The role often requires a mix of quantitative analysis, market research, and sometimes, hands-on trading under supervision.
In flow trading, if you are simply just executing trades for people, what is the skill to this? What is the nuance? What makes some better at this than others?
Flow trading is far from just executing trades. It involves understanding the client's needs, market timing, and sometimes providing insights or advice on market conditions. The nuance lies in the ability to execute trades efficiently, managing both the client's expectations and the firm's risk. Some traders excel by having a deep understanding of the market, exceptional decision-making skills, and the ability to anticipate market movements. Building strong relationships with clients and having a reputation for reliability and insight can also set you apart.
Remember, commodities trading is a vast field with opportunities ranging from agricultural products to energy and metals. Each commodity market has its own set of dynamics, making the career path rich with opportunities for learning and growth. Keep exploring, and you might just find your niche in this exciting world.
Sources: Q&A: BB Flow rates trader, Navigating The Floor: A S&T Analyst's Guide, Q&A: I'm an Agricultural Commodities Trader, Do What YOU Want on Wall Street, Sales vs Trading
First of all, you can't group all commodities together and get one answer. Asking for an exact day to day is never gonna get an answer cause its all different. Different at each shop, different for each commodity, etc. You will do what your boss tells you to do. That's the best answer I can give you to an exact day to day.
I'm sure there are flow traders at some shops but that's just taking instructions. The people that are the best at this are the ones who can move the quckest and get through all the executions faster. It's all about making the right decision within the limits of the specific trade and doing it quickly so you don't lose the market/have it move away from you.
If you are looking to get started, apply for operations jobs at commodity houses, energy companies, etc. They will tell you what you will be doing and you can decide if its right for you.
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