Q&A: I'm a real-time power trader
A little about myself, graduated 2 years ago from b-school in the northeast with a finance degree. Originally had planned to go the Asset Management route, passed CFA Level I etc, wound up in the power trading industry after a internship and got a full time gig shortly after. Ask away.
Strong username, plan on buying one soon ;) ?
Any advice for landing a power trading internship? Do you think having an engineering degree could help me land an internship in this field?
-haha maybe when they've depreciated enough
-as far as landing a internship, network your ass off, hit up alum, apply to every position that is relevant to power trading. look for load forecasting analyst positions, risk, commercial ops, anything to get your foot in the door really. one thing i would highly recommend is learning in great detail how power markets operate. you would make a damn good impression if you could tell me how LMP's work, how power physically flows on the grid, generation stack, how generation is dispatched, etc. all the ISO websites have great free training videos that go over this in great detail. (PJM MISO CAISO) it's embarrassing how many traders i've worked with don't know how power physically flows.
-i think an engineering degree would help a lot, the more quantitative your background is the better. every trader position i've seen requires a finance/economics/engineering background
I know these have been discussed in the past but:
What is a good way into a real-time trader position? (I'm guessing most utilities, let alone trading firms, would like you to have some experience)
What is your schedule like?
Where do you want to go from here? Day-ahead trading? Origination? Different product altogether?
scheduling is the best way to get into trading, but even those are hard to come by straight out of school. it is true that most want experience, you'll have to work your way up from BO/MO. once you have your foot in the door, even if it's not the position you want, it's all up to hard you want to work to become a trader.
5 week rotation
mon-thursday 6pm-6am
mon-fri 9am-5pm (support week)
that's a great question. i'm trading west power now, but i'm much more interested in trading east power, so i'm trying to move into roles that trade pjm miso nyiso neiso. it's a much more liquid and volatile market with way more opportunity than the west imo. i also want to move into trading financial products (ICE Cash/virtuals) some power markets in the US are not structured, so its the old OTC market. can be quite boring.
how do you deal with the change to your body clock? I'm find working a 12 hour day, but if it was 7-7 the other way I'd be fucked I would think. I would think you'd need copious amounts of adderall and melatonin (not simultaneously mind you) to get through this. curious as to how you maintain your health with this crazy schedule
Serious and not-serious:
1) which b-school? If you don't want to be specific just give us a tier (HSW, m7, top 15, whatever).
2) how do you feel that your name is f430 when there is a far superior 458 available?
top 20
458 is far superior in performance, F430 is the most beautiful and elegant car ever made
Disagree. 360 is prettier. 355 sounds better.
Do you need an intern?
not just yet ;)
nrg??
no but they are a great shop. they're the first to really start investing and focusing on the retail side, as well as creating a energy product that is more than just the commodity itself.
How much math is involved? What's a typical type if problem, buy that you would do? Are you trading all futures contracts? Are you at a utility, bank, ferc, or what type of power-gas, electric, oil?
-depends what product you're trading, on the hourly desk nothing more than basic arithmetic. need to be fast and quick with numbers though. if you're trading FTRs and transmission products you might need strong math and programming skills.
-i'll often call my counterparties and see if there is cheap power i can purchase rather than generate myself. if my gen cost is $50 and there's a $40 market out there, ill buy as much as i can to bring my generator to the bottom. if it's a hot summer day and i dont have enough of my own generation, i'll have to purchase to cover my load. this is the Asset Management side of power trading. we can also speculate and import/export with ISOs.
-utilities/co-ops/munis/industral load.
-from a trading standpoint we dont care about what type of source it is, a MW of energy is a MW of energy. a pure commodity.
nights can be real slow, keep the questions coming
I feel you... nothing worse than spending 12 hours in front of a computer and not flowing anything :-/ Super quiet summer here in Europe...
so..i dont have a STEM background but i work as a data analyst and am familiar with machine learning techniques, some SQL, python ,etc ....
Im not the kind of person who can sequence numbers or do long division in my head..so do i have a chance at all?
who ever said you need to be able to sequence numbers or do long division in your head to trade energy
alot of option trading firms have tests like this
This is a new area for me, so forgive my ignorance; - What are the high seasons and how do you prepare for it? - How do you make the time pass by when you're having a slow shift at night? - What is the average span of a traders career in that sector? 10 yrs, 35yrs?
-winter and summer are the busiest times, basically when there is the most demand for power
-research different markets
-it can be as little as 1 year to an entire career, depends if this is something you enjoy and want to do long term
-Pre rooftop solar, west power was not all that boring in real-time, not at all. Especially with the year mr. songs went down.
How is the dating life, do you find nurses with similar shift patterns? How you deal with all the time off and alone? Do you ever not wear pants on a slow day? One of my goals is to not wear pants one weekend at the office when I am on-call and forced to come into the office.
-the demographics of the city is not to my taste so pretty much non-existent -research markets and travel travel travel -can't say that i have...
I work in the field and have some questions for you - What would you say would be good learning materials (books, etc) would be besides the ISO videos and slides - You say you trade in the west so how has the penetration of renewables effected your trading?
- How do you see the future of renewables effecting your trading (specifically the CAISO duck curve) - Do you recommend any industry conferences to attend (I know platts has a huge shindig in vegas but I was wondering if there was anything else you would recommend since alot of these are shit/just a place to throw around business cards
hey, good to see you back on WSO, hope all is well
-Energy Trading and Investing by Davis Edwards
-i personally dont manage any renewables units, but i trade with plenty of people who do. obviously subject to short term weather forecast deviations so it can be tricky trying to trade around it. renewables will inevitably play a larger role in the future and i think the grid will play more of a balancing act. any time you add generation and transmission lines to the grid, the topology of the system changes. renewables also can add considerable congestion to the grid.
here's one perspective http://www.businessinsider.com/green-energy-isnt-compatible-with-us-pow…
-nodal conference and bloomberg holds energy events, ISO's as well.
How's the compensation?
Career Path/Exit Options?
Are utilities a good place to start out at? I've been interested in the past and I have contacts on the trading desk of a large utility here on the west coast.
differs largely from shop to shop but they all pay well. look it up on glassdoor
many options, you can be a consultant, quantitative analyst, origination, sales for market data software, endless. i personally want to stay in trading, love the fast-paced environment, developing strategies, and most importantly the intensive research
keep in mind "Real-Time" itself is such a vague term. you can trade on the hourly desk doing shift work, you can trade real-time financial cash on ICE, options, you can trade financial products like virtuals and up-to that is essentially a combination of trading in the day-ahead and spot market and arbitrages the spread to converge prices, resulting in a more efficient market
Physical or financial?
physical
I traded the east and happy to provide an outlook from a different iso
How much do you think an oil trading background would help with power? I'm guessing the risk management will be quite a bit different due to the big intraday price changes in power.
Also, what kind of compensation packages would come with analyst/scheduler/risk/trader roles? I'm sure all are pretty variable, but would appreciate a swag at the numbers.
-i think it would help immensely, what interests you in going from oil to power? you are correct on that, risk management and the volatility of the markets is completely different due to the instantaneous production and consumption of energy, and the fact that power cannot be stored.
name me a commodity that can go from $80 to $2000 in one hour. generators are large man-made machines that will (and often do) trip. on a hot summer day when your supply is cut short like that... good luck.
Without having worked in power before, it has mostly just been the parallels that I can see from the outside and a general interest in the commodity markets (moreso than equities). I'm currently in the process of getting an MBA in Ann Arbor and it seems to me that working for someone like DTE or Consumer's Energy would be about the only way that I would stay in this area.
I'm currently working as a "real-time trader" but my desk doesn't trade bilaterally. What should I focus on that would better prepare me for a desk that does?
Also, could you elaborate more on your research process? What are you primarily looking at? Market rules? Historical RT prices?
What tools do you use on a day-to-day basis? YES Energy? IIR? Genscape?
what makes you want to trade bilaterals? and what markets are you trading now?
-historical prices, transmission constraints, outages, load
-i mostly use YesEnergy
It's not that I necessarily want to trade bilaterals. It just seems more hands on, so I'm wondering if it requires a different set of skills.
I'm in MISO and PJM.
Try out Innotap - best platform for real-time energy trading. Innotap is high performance compared to Yes which is basically an FTR analytic's tool that added a "view" into their database which they branded a "dashboards" but their performance is not up to the speed of Innotap which uses a proprietary connection (not a public web connection).
Do you see people cross over from market risk to trading?
i have seen many people cross over from market risk to trading, many of my counterparties who are now trading started out in risk
For someone who is interning in BO/MO do you think it is worth sticking around to eventually get into a FO trading role? I mean if your with a big 6 OG firm it can take 4-5 years before you get that opportunity (depending on your performance of course).
apply for front office roles at other shops while trying to get into FO at your current shop
I'm looking at making a transition into energy trading. I currently work for an electric company, I've obtained a MSc in Energy Management, and I have made good connections with that side of the company. Two questions. 1. Can you help me understand what it means to work in "Origination"? 2. Have you seen people enter directly into Day-Ahead trading, skipping over real time trading? Reason for asking, I'm not afraid of hard work and weird hours but I have two boys and I coach their sports teams, therefor I have to have a fixed schedule.
Any info will be much appreciated.
Great topic, and appreciate you tossing this out there.
glad to help out
If you are hired as an real time trader at an IPP, how big is your book? For example, how many MW's would an entry level RT Power Trader be responsible for trading, to be specific at an IPP?
what is the bonus structure ?
Do you feel that passing even just one level of the CFA opened or will open any doors?
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