Advice for future Chicago Booth MBA student
Hi all,
I'm heading off in September to get my MBA from Chicago Booth and am looking to break into energy trading upon graduation. I grew up and live in Houston, Texas which seems to present numerous opportunities to come back after graduation with large banks having presences here (commodity HQs), multi-national energy firms located here (BP, Shell, etc) and a few energy hedge funds.
Background: valedictorian of my high school (1 of 452), perfect 800 on math section of SAT, 3.9/4.0 from UT Business Honors Program, finance major, did energy trading and energy IB for my internships, but got into commercial real estate full time after graduating, doing IB and development/investment here in Houston. Booth is a quant-heavy school which should add value to my resume (I hope) in the trading world. Not to mention, it's in Chicago which should provide lots of opportunities as well.
Question: what advice do you have to 1) best market myself for an internship next summer with a premier energy trading group (bank, energy firm, hedge fund) not having much experience and 2) to best prepare myself in terms of learning about the energy industry, learning about trading, etc. I'm reading "Trading Commodities and Financial Futures" by Kleiman now.
Thanks ahead of time to all.
Congratulations on the Booth acceptance- there are a couple good books and presentations on energy products and commodity derivatives- you want to check out Helyette Geman's book and her conference at Birbeck- which posts a lot of material online. Another good resource is the University of Houston's annual conference. Alexander Eydeland also has an excellent book with a co-author now in its 2nd Ed.
Admittedly, it's going to be tough to get into energy trading without a background in the energy industry. Most people who join the leading firms have a bachelors/masters in chemical engineering, petroleum engineering, computer science or stats. The most common path is to start in a FO desk support/strategist role and eventually move on to running your own book. Since you have a few months before you start school, it is definitely helpful to work on your coding skills.
Most traders code their own strategies so you should have a good background in R/Splus if not VBA and hopefully some exposure to C++. Also, I would supplement it with a refresher of Calc, ODEs/PDEs and matrix algebra since these are essential in terms of formulating a strategy at the white board stage. Without a doubt, a prospective trader at the GSB should take Prof. Tsay's financial econometrics/time series class. The information is incredibly useful during an internship and will make you significantly more valuable to the desk. Best of luck.
Thanks so much, Micheal. Very helpful information.
I checked out the books you mentioned and have added them to my queue. I was also referred to Hull's book on Options/Futures/Derivatives as a must read. Question - these books all appear to be 500-700 pages and not light reading - more textbook-like. Any thoughts on ways to skim them or focus on certain areas of most importance?
I also reviewed Booth's course curriculum and noted Tsay's time series classes to take next year. His and other classes should be good training.
A few follow up questions for you:
1) What is an "FO desk"? Sorry if that's obvious. I'm a novice. 2) Programming skills - I was referred to an intro book on VBA called "Visual Basic.Net: How to Program" by Dietal. Do you think that will be sufficient to get a grasp of VBA? Another novice question: why do you need VBA to trade energy? It seems an understanding of futures/derivatives plus market fundamentals (supply/demand factors) would be sufficient to do the job. Sure there is a great reason - just wondering?? 3) Does the city of Chicago provide many opportunities that you know of to get into energy trading? I would imagine so. 4) Would you suggest starting a physical trading firm like BP, Shell, etc first or would a bank provide better overall training?
Also, what's your background/experience? Please PM me if you prefer. Thanks so much.
Any other thoughts from energy traders out there? Thanks.
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