Preparation for Metals trading analyst
Hi everyone,
Ive been a reader of this website for a while, and would like to offer a thanks for all the useful advice.
Ive managed to get an SA role as a trading analyst on the metals desk at a BB, would like to know what preparation i would need to do before I start.
Thanks
Expect the unexpected. Read up on derivatives such as futures and options. Be enthusiastic and ask lots of questions....even better if you associate the derivatives knowledge into your questions (contango/backwardation). Don't be obvious about sucking up, rather be smart about it, because remember your boss has been in the same shoes you have.
Learn the fundamentals of mining and who the major players are. Learn about futures/options but also about OTC forwards. You also need to know who the major consumers/producers are of each metal and where they come from in the world - (what country). Also, have a good handle on gold because that is the majority of the metals market.
how does one get an SA role at a specific desk? I thought SA programs are rotational and you rotate through several desks?
Which bank? Is that you, Evan?
Sitting on the metals desk could mean a lot of things. As an SA, you're not licensed to do anything, so you'll be getting coffee/breakfast/lunch/dry cleaning/groceries. You'll also be shadowing a trader or salesperson (don't bitch if you have to sit with sales for a little while--since you don't know anything about the business, you need to see what salesmen do; more importantly, you need to learn who the clients are, where they do business, what countries they have exposure to, where the mines are located, and what currency exposure those clients have).
No one is going to expect you to know much. You're a summer analyst. They expect you to be eager to learn, and to have a very basic level of market knowledge. Ask to start by sitting with a trader of a flow product (spot, futures, swaps). You'll get the chance to learn the market lingo a lot faster that way. If you're on precious metals, you'll learn about the gold and silver fixings (10:30am and 3:00pm in London), and probably see if you can keep the position for the main dealer. If it's a big fix, you'll probably fuck up a few times and get yelled at.
If you work for me, I will bet you lunch every day for the whole summer on some piece of market knowledge. Who is the largest aluminium producer? Where is most of the world's platinum mined? Which metals are considered 'precious?' Which precious metals can you trade electronically? Which are strictly through the brokers? What are the tickers for gold, silver, platinum and palladium? On what system can I see a tradable price in spot bullion? How large are the futures contracts in each metal? What is the most commonly traded base metal? When are the liquidity periods for each of the metals? How many ounces of each metal can the market absorb without shitting itself? What is the right spread in 10k oz of spot gold? How do you price a bullion swap? What is an 'exchange for physical?' When would you use it? Why do futures and spot prices differ? How do you calculate cost of delivery? Why would anyone actually want physical gold delivered to them? How would you make that happen? What are the uses of the platinum group metals? Which equities should you be watching to help determine demand for those metals? Historically, at what premium does platinum trade to gold? What is a call? What is a put? What is a straddle/strangle/risk reversal/butterfly? What do backwardation and contango mean? How can you take advantage of each in the metals space? On which side of the price do most metals producers deal and why? Who are the five participants in the London gold fix? When do the fixings take place, and how do they work? What is the name of every person on our desk, and what do they trade? Who are the central bankers we care about? What is 'event risk,' and how do you mitigate it? What is Var? What is delta/gamma/vega/volga/vanna/theta/rho? If 'riskies' are trading to the topside, what does that mean about the market perception of spot moving forward? How much could you possibly lose in the 20 minutes you are gone taking a dump given xyz portfolio and the current time? And finally, who is your daddy, and what does he do?
If you can answer all of those questions I might just let you punt around a bit in my strategy books (a very little bit). If you're annoying, though, I will pawn you off on the salesmen.
You're welcome.
I have no clue, how would I find that out?
open interest
Digging this out: a lot of people (newbies) seem to talk about oil when they think of commodities trading. Metals doesn't seem to get a lot of limelight. Could somebody of the pros explain more about careers etc in metals trading? In terms of compensation and profits, is it on par with oil or is there less money to be made? How is the derivatives market for metals?
Any Metals Traders here? (Originally Posted: 05/21/2012)
I will be going for a summer internship in metals trading, more specifically base metals on the London Metal Exchange. Just wondering whether are there any books or websites I can read up on metals trading?
So far I only found one book and it is damn expensive.
http://www.Amazon.com/Metals-Trading-Handbook-Companion-Exchange/dp/185…
http://www.openisbn.com/preview/0849305187/
Boom. 3 chapters for free.
metals trading can mean a lot of things; are you going to work for a ring dealer, a scrap shop, some metals focused HF, a physical shop (refined, or concentrates), etc?
bump. can someone compare metal trading to crude trading?
Metals trading at a BB? (Originally Posted: 12/06/2014)
Wondering if its a good place to be the next few years? I know there's the risk of the desks being shut down soon but I see that as a plus. Learn as much I can about the business before it's shuttered/make a move after.. Thoughts?
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