7/18/15

I embark on my journey as a Trader in two weeks, as I just gave my two week notice from a shop in Houston to the East Coast. Going from a NG Scheduler to a NG Trader/Scheduler, still young (3-ish years since UG).

You can read more about my background here: Finally a Gas Trader

Comments (45)

7/12/15

Thanks, just added to the frontpage, and will add up top again a few times this week.

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Financial Modeling

7/12/15

Any recommended reading for those looking to get an overview of the NG market, it's pricing dynamics, product flows, etc.? Thanks in advance!

Best Response
7/12/15
MaritimeMonkey:

Any recommended reading for those looking to get an overview of the NG market, it's pricing dynamics, product flows, etc.? Thanks in advance!

I know a lot will hate me saying this, but no.

In terms of trading strategies--sure.

However, NG related, at least physically nothing replaces knowing what's happening on the pipes you handle.

Iloveoptions:

How does physical trading compensation compare versus BB Investment Banking in the first few years out of school? Is it possible to land sophomore and junior summer internships at the large physical shops(Cargill,Glencore,etc)?

Thank you for doing this.

Physical trading comp. will be at an 2nd year analyst-Vp range depending on exp. So think along the lines of $90-250 for base. Bonus at Ib I belive is 50-100% base, in trading usually their is Corp bonus and book bonus( percentage of PnL)

Corp bonus for traders is as low as 10%, as high as 30% of base. Book is 2-12% of PnL. My book goes up 1% each year till 8%, and I handle a small AMA group ($5-7 mil) which will increase as I get more experience.

I'll use my salary as as reference. My shop is real new, so it's weak in relation. I make between 100-105 base. My bonus is on track for 18% of my base, and if I generate $500k in profit, I make 10k. If I do all those I can make about 130k year 1 at this small shop.

The big boys at Vitol, Cargill can see $100m + books with $200k bases, and some extremes at 10% PnL.

As for internships. Get a Quant degree at an ivy, and there's your chance. Very hard otherwise. Know of a fellow who did Economics at Harvard, interned at Glencore for two summers and traded full time since graduation.

7/18/15

I do electric forecasting at a utility. Its really a lot of data manipulation in SAS and checking code. I like it right now but I'm considering trading as an exit or possibly just moving over to gas since I don't see a future in forecasting without having a phd.

So far in your trading job, are you still doing the forecasting end? With gas shouldn't it have been forecasted such that they only buy in the market as a last resort? Are you trading every day right now during the summer? Are you trading forward contracts?

7/19/15
Lerg:

cool, but what do you think about for people who would like to work in energy trading and avoid Houston for the most part? Is that fighting a losing battle?

Really depends. At my age, I don't think it is. I'm a "cheap" trader, so if there's a Houston void in 2-3 years I'm a possibility for most companies' budget, experience level, and background. Plus, I would relo to Houston as my background shows I've been there for two decades. I think ultimately to be top dog, you got to be in Houston.

Banking for New York, Energy for Houston. I will re-enter the market when I'm 26-30, with 2-6 years experience, and some more credentials.

Jo110:

I do electric forecasting at a utility. Its really a lot of data manipulation in SAS and checking code. I like it right now but I'm considering trading as an exit or possibly just moving over to gas since I don't see a future in forecasting without having a phd.

So far in your trading job, are you still doing the forecasting end? With gas shouldn't it have been forecasted such that they only buy in the market as a last resort? Are you trading every day right now during the summer? Are you trading forward contracts?

I don't do any trading, till next week....when I start.

As for forecasting, we don't do anything spectacular. We judge similar degree days, similar burns, some meters, and come up with an aggregate. We buy/sell based off market, not just forecast in summer. Winter, we buy heavily based on forecast, and sell little based off of market.

7/12/15

How does physical trading compensation compare versus BB Investment Banking in the first few years out of school? Is it possible to land sophomore and junior summer internships at the large physical shops(Cargill,Glencore,etc)?

Thank you for doing this.

7/12/15

@Butterbean thank you for the AMA and posting your background and experience. Some questions if you can answer:

1.) Is it possible to get into trading or a trading rotational program without being a scheduler but having had industry experience (i.e. O&G experience with F500 company)?

2.) Besides the CBOT Commodity Trading Manual and other books or resources you can recommend on commodities trading or any books you would recommend?

3.) What do you LEAST like about your job? If you don't have a reason then what do you find least appealing about what you do on a daily basis? Just curious.

Thanks for your time!

7/12/15
RedRage:

@Butterbean thank you for the AMA and posting your background and experience. Some questions if you can answer:

1.) Is it possible to get into trading or a trading rotational program without being a scheduler but having had industry experience (i.e. O&G experience with F500 company)?

2.) Besides the CBOT Commodity Trading Manual and other books or resources you can recommend on commodities trading or any books you would recommend?

3.) What do you LEAST like about your job? If you don't have a reason then what do you find least appealing about what you do on a daily basis? Just curious.

Thanks for your time!

1) I think Shell and BP hire through their TDP program via MBA, top undergrad candidates. So it is possibke, just hard. I'd go full throttle at acquiring a scheduling role though.

2) Not really besides EIA, know your hubs, physical stuff. That goes beyond belief.

3) Summer is real slow. Painstakingly so. Hard not to get careless or complacent. My pipe was an extremist, 0 to 100.

7/12/15

Nice work on nailing your transition very early on versus your peers. Best of luck!

7/12/15
EnergyHOU:

Nice work on nailing your transition very early on versus your peers. Best of luck!

Thanks.

I stepped out of the deep end to appear taller in the shallow side of the pool.

7/13/15

Congrats on the new job, I am currently a scheduler on midwest pipes for one of the larger players in physical NG. I am curious how did you go about finding this position, did you go through headhunters or just look for postings online. And if you did use some headhunters in Houston I was wondering if you could pass me their info.

7/13/15
NatGasMover1234:

Congrats on the new job, I am currently a scheduler on midwest pipes for one of the larger players in physical NG. I am curious how did you go about finding this position, did you go through headhunters or just look for postings online. And if you did use some headhunters in Houston I was wondering if you could pass me their info.

I searched extremely hard. I got this role without a headhunter, but came across a couple on the way

I took the search as if it were a job itself.

HunteR23:

Do you trade CL or NG futures on your personal account?

Nope just some etfs.

7/13/15

Do you trade CL or NG futures on your personal account?

Financial Modeling

7/13/15

What was your major and your gpa?

7/13/15
mshiddensecret:

What was your major and your gpa?

Economics and 2.7

Giantdad_:

Sorry, I posted this in your other thread; I'll go back and edit my other post.

With all the BBs divesting or firing their commodity trading divisions, do you see further contraction in the job market for O&G traders? I'm not sure if there's any connection between O&G trading roles and equity trading roles, which are going to shit due to wafer-slim margins. Do you believe a similar trend will follow in O&G trading?

Thanks

BBs in commodities tend to swing harder financially than physically. They swing the pipe for a damn penny.

The margins are getting killed, and ultimately the financial front will be there for just hedging.

I think physically it'll still be competitive, and thriving

7/13/15

Sorry, I posted this in your other thread; I'll go back and edit my other post.

With all the BBs divesting or firing their commodity trading divisions, do you see further contraction in the job market for O&G traders? I'm not sure if there's any connection between O&G trading roles and equity trading roles, which are going to shit due to wafer-slim margins. Do you believe a similar trend will follow in O&G trading?

Thanks

7/13/15

Two questions for you:

[1] Did you ever trade oil futures in your personal account? Is there any benefit on building a personal track record doing so, say on $100k of capital for a couple of years?

[2] What are your thoughts on trading between 1x and 2x oil ETF/ETN's - USO/UCO/SCO/DTO/OIL.. basically just re-balancing money in and out of these over each week or two, is that a common trade professionals use?

7/14/15
wallstreet246:

Two questions for you:

[1] Did you ever trade oil futures in your personal account? Is there any benefit on building a personal track record doing so, say on $100k of capital for a couple of years?

[2] What are your thoughts on trading between 1x and 2x oil ETF/ETN's - USO/UCO/SCO/DTO/OIL.. basically just re-balancing money in and out of these over each week or two, is that a common trade professionals use?

1) Absolutely, for yourself. Don't see it as leverage point to get a job. I don't trade it in my personal, I stick with regular etfs and mutual funds.

2) That's more s&t at a bank and not physical trading at a shop. My job is to buy/sell gas and physically transport it, do back to backs, or find an end user. It's not aggregating etfs and getting in. & out of positions. More so handling pipelines to keep imbalance good, and margin too.

7/14/15

Thx for the reply, I am curious what sites you found most useful while searching for your new position. Also what pipes did you schedule on?

7/14/15
NatGasMover1234:

Thx for the reply, I am curious what sites you found most useful while searching for your new position. Also what pipes did you schedule on?

LinkedIn and messaging hiring managers directly. That, and indeed.

Pipes- etenn, tco, cgt, sonat, tetco, trunk

7/14/15

I take it TETCO was the difficult one?

7/15/15
YellLeaderBevoEater:

I take it TETCO was the difficult one?

For our book, etenn. It's our toughest pipe.

Taught me a lot.

7/14/15

Congrats! I was wondering if you plan to stay long-term on the East Coast now? Do you feel that working in Houston again is inevitable as a physical energy trader?

7/15/15
Lerg:

Congrats! I was wondering if you plan to stay long-term on the East Coast now? Do you feel that working in Houston again is inevitable as a physical energy trader?

Yes, within a few years I'll go back home.

7/17/15

cool, but what do you think about for people who would like to work in energy trading and avoid Houston for the most part? Is that fighting a losing battle?

7/16/15

Congrats butterbean! Very similar story to yourself (age, location, background, etc.), working at a large E&P here in Houston, so it's nice to see other young guys advancing.

So - what's next? You know you've thought about it...

7/18/15

Valuable insight on this thread so far, thanks for the info!

How hard it is to transition from scheduler to trader? Can you describe a typical day for you?

Thanks again

7/19/15
Hydrocarbons:

Congrats butterbean! Very similar story to yourself (age, location, background, etc.), working at a large E&P here in Houston, so it's nice to see other young guys advancing.

So - what's next? You know you've thought about it...

Oh, I feel #1 way to evaluate an opportunity is by the exit opps.

Next step is to try to become a Sr. Trader here at this place on the East Coast, then leverage that to get back into the Houston market. Or just take a lateral into a trading role in Houston. It wasn't going to come about in Houston, I knew going up and away would make things possible. Now that I have the title, I'm viewed as that.

TommyGunn:

Valuable insight on this thread so far, thanks for the info!

How hard it is to transition from scheduler to trader? Can you describe a typical day for you?

Thanks again

I don't exactly know given Day 1 is next week, but from at least my current shop, the gameplan really is dictated byt he market. If we are able to be in the money by selling, we decide to go short. If we're in the money to buy, we tend to go long. We compare at different receipt points, and let the market dictate. It's really the last few days of the month where we force to try to balance the pipe, and by doing so get the financial desk to hedge our buys.

Scheduling wise, for me, it's about keeping capacity open and understand my trader will want to use a few avenues for future day and intra-day, and keeping them open and letting them know how much we can physically transport. I let him know the number if he mentions to me, he might be doing intra-days. I let him know, most I can do is x or y.

Trading, he's looking at what could back to back(buy at one point, sell at same point and use no transport), or what he could dump in storage(during summer) for buy price + transport price. Or what he could buy to serve our demands at a cheaper rate than he's sold historically or market wise.

The real interesting thing is my company has about .6bcf on this pipe I handle independently(no one knows it, but me), and the pipe itself is 1.2bcf, and my new company wants me to help build out their assets on this pipe. So, for one my company will struggle in winter without me. And for two, I have intel to provide great value elsewhere.

7/19/15

Congrats, you have a great story. Can you go over some of the interview questions that were asked? For your scheduler role, and for your new role as a trader? It seems that interview guides/questions for the oil and gas industry are hard to come by.

It seems that cases are being used more and more frequently during the interview process now.

7/19/15
kimosabe:

Congrats, you have a great story. Can you go over some of the interview questions that were asked? For your scheduler role, and for your new role as a trader? It seems that interview guides/questions for the oil and gas industry are hard to come by.

It seems that cases are being used more and more frequently during the interview process now.

For scheduler, unless you were previously a scheduler, it will have literally no technicals. You can't know physical scheduling without doing it. It's just your attention to detail, your ability to multitask, handle stress, and be mentally alert. It's a lot of details punched in a high intensity time frame. Quick math, quick decision making, and extremely accurate. Everything wrong= money lost. You don't generate revenue, you just prevent costs.

For trading, it was a lot of which pipes are you on, what's the most difficult thing that's happened to you on the pipe, what areas of the pipes do you feel would be more advantageous to pursue.

7/19/15

Thanks for the info, and best of luck to you in your new role.

7/19/15
kimosabe:

Thanks for the info, and best of luck to you in your new role.

Thank you sir.

7/19/15

Just wanted to punch in and say congrats. As someone who started off around the same time as you in scheduling, good to see people making the jump. Also wanted to chime in and say east tenn is one of the more challenging pipes out there that I've dealt with.

7/22/15

etenn is good ole TGP? With there 9000 daily emails about secondary service. Congrats bud seems you are on the right path. Only thing I will say is that it seems to me that you worked below more of a physical optimizer and purely cash guy. Also seems your new role will be the same.

I will say as you learn more try to look beyond "perfect optimization" and "arbitrage". Sometimes the best trade is doing something not economic because it opens up an option later on. Bridging that gap will make someone move from a cash role to a term role.

7/22/15

Negative Ghostrider, that is old, crappy ETNG. Runs from TETCO/TGP/MGT/CGT through some real podunk parts of Tennessee, past some chems, a TVA plant, some CBM production, to Transco Z5. If you think TGP is fun, wait until your SIP gets cut because the pipe's held together by duct tape. NBD though, you're just losing your M1-Z5 spread in February.

8/2/15
marcellus_wallace:

etenn is good ole TGP? With there 9000 daily emails about secondary service. Congrats bud seems you are on the right path. Only thing I will say is that it seems to me that you worked below more of a physical optimizer and purely cash guy. Also seems your new role will be the same.

I will say as you learn more try to look beyond "perfect optimization" and "arbitrage". Sometimes the best trade is doing something not economic because it opens up an option later on. Bridging that gap will make someone move from a cash role to a term role.

TGP is Tennessee Gas Pipeline, ETENN is East Tennessee. One's Kinder Morgan/DART-based, the other is Spectra- Link based.

Both are bad boys though; one's an annoying EBB, the other has a moronic group running the operations.

As for trading views/perspectives, will take that in mind. I completed my first trade on Wednesday and was told not to really do those kind of deals; it was just a simple back to back, I bought at one point and sold at one point, made a dime though.

Really though this is all new to me; I sat in on origination deals for the first time and realize how lost I am. There's a learning curve, but most importantly there's a learning opportunity. I could make more in Houston, with taxes also helping me there, but I really feel like the learning curve here if I take 2-5 years here...will be unparalleled.

YellLeaderBevoEater:

Negative Ghostrider, that is old, crappy ETNG. Runs from TETCO/TGP/MGT/CGT through some real podunk parts of Tennessee, past some chems, a TVA plant, some CBM production, to Transco Z5. If you think TGP is fun, wait until your SIP gets cut because the pipe's held together by duct tape. NBD though, you're just losing your M1-Z5 spread in February.

Lol, all so true.

10/9/15

Well, a slight update here.

Had a vacation pre-planned before joined. Let them know this and to NOT extend an offer unless they felt it was fine.

Was told trader's book stay at home, and it's not on a market basis. But the one covering for me blew a lot of money, and they went back on their word and decided to sit the bonus on me. Stating it wasn't in writing, therefore, this is how it i'll go. They also gave a decent signing bonus, and mentioned that if I do leave within the two year time frame-- it has to be given back whole.

I just shrugged it off, and said I understand. I'm prepared to eat the loss, and look elsewhere. Bad timing, I'll hit up a headhunter or two. Parents told me to just reach out and search for a new opportunity, but a better place to be at.

This place is kind of toxic, but I love my new city, and I'm learning. So I'll continue to do what I do and that's learn as I go, but keep my ears and eyes open and reach out to headhunters. I think they'd understand this, it's absolutely unethical bullshit.

10/13/15

Dang bud, took only 3months to burst the bubble. Yup this is the reality of the gig and if nothing is in writing it stinks. One should always be chatting to headhunters truly trust me your boss and boss boss is doing the same. Vol is still crappy, so people put on larger positions and then things blow up quick, continues to be an UBER grind of a year.

10/22/15

Haha, yeah. 3 months. Kind of shitty, but now I know better. I was assuming to give them the benefit of the doubt, the whole "not in writing" meant their plans were improving as their performance was(seeing their financial statements) so if I locked in something concrete I couldn't get the benefits of better bonuses, benefits, etc.

Little did I know, though.

Some positions are getting hot. A lot from what I'm seeing is there is a disconnect given my experience(two years total...1.5 scheduling, .5 trading) with pay. I'm below market for a trader, but above for someone with two years experience. So there's this, is he actually a trader, or a scheduler, or is he a trader/scheduler. What's there for him to take, blah blah blah.

But ya, everyone's probably connecting to headhunters, too. I'll just sit back and wait my time.

It's the little stuff that piss me off--called out on using my phone in the kitchen waiting for the microwave to heat my food, shit like that. It's like go away, man.

11/7/15

Well, if there's another update I can provide and not start a new thread. I'm nearing a final interview and potential offer in a not so desirable city but a place where my role would quite unique.

I'd literally be the sole chief of the trading desk, and would enter other commodities too as they stop third-party sourcing it. This is an interesting opportunity, and would require a greater deal of commitment than just the 7-4. I'd have my boss, and their boss which are the manager of marketing and the vp of marketing. I'd be the sole trader and cover the entire northeast desk.

I think I need an experience like this, we'll see if the offer gets extended. Most importantly, everything is written I'd hate for the same thing to happen again.

11/30/15

Well, another update. Didn't get this role, as they learned through grapevines that I had a lot of heat and were fearful I'd leave shortly again. Fair enough to think, I'd try to calm their worries but to no avail. That's fine, I'll move on.

3/14/16

Been following your story. How did things progress - back on a trading desk?

7/17/16
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