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10/19/13

Moderator Note: This post originally went up 07/2012 and we thought it deserved to go back on the homepage for those who may have never seen it.

As someone with a non-finance/economic educational background, how easy is it to break into the 'oil trading arena'? And by 'oil trading arena' I mean physical trading, operations, scheduling, and oil derivatives trading.

I graduated last year with a Master of International Law - 3.0 GPA, and after wasting over a year looking for work related to international diplomacy, have decided to see if I can get involved in oil trading. The only real experience I have has been several months' worht of simulated trading of WTI Futures, but again, I know that means really little for the physical trading firms, for whom more emphasis is placed on the actual physical side as compared to derivatives.

I know that Trafigura and others run their annual graduate intakes, but realistically, with a non-finance degree, I don't favour my chances. I mean I can't exactly say to them that although I don't have an economics or finance degree I have read a tonne of books on economics, trading, and the oil and energy industry, and they should just trust me on that.

So what other options are out there? I know people say go into risk/ops/scheduling if you want to get into physical trading. Risk is more or less out for me since I'm not a maths genius. Ops and scheduling seem like completely viable options, but where would I apply for such positions? And again, with no experience in the finance sector, how easy, and what are my chances, of actually getting hired?

I'd appreciate responses from anyone who is even remotely knowledgeable of this area.

Comments (299)

7/17/12

PM monty09

"There are three ways to make a living in this business: be first, be smarter, or cheat."

http://www.jasonbondpicks.com
8/30/13

Sandhurst:

PM monty09

lol...

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
7/17/12

you have almost no chance unless you know someone or go through compliance. maybe trade finance.

7/19/12

Start out in compliance/ confirms or in traffic..chances are, you'll end up in back office handling invoicing and working on the accounting end of the business..you'll understand the movements of physical product more than the economics..work your ass off there, and you just may find yourself in a scheduling role where supply and demand govern your 9-5 job

7/19/12
Urban Guerrilla:

Start out in compliance/ confirms or in traffic..chances are, you'll end up in back office handling invoicing and working on the accounting end of the business..you'll understand the movements of physical product more than the economics..work your ass off there, and you just may find yourself in a scheduling role where supply and demand govern your 9-5 job

i'd still give it a 10% or less chance once you make it to scheduling. doable and happens frequently, but most of the time it doesnt.

7/19/12

When you say start out in compliance or in traffic, do you mean at one of the big banks that trade commodities like GS or MS, at actual oil companies like BP or Chevron, or at one of the oil trading houses?

7/19/12

I'm speaking from personal experience which is from the actual oil company side -- where our bottom line is affected by the physical movement of product. Also, if you're in compliance/ just starting out -- this is essentially boot camp for everybody who wants to be a physical trader one day..the best compliance/analyst are promoted to schedulers -- this obviously depends on a lot of factors including growth of the book/ group, flexibility of the company to provide that particular opportunity as well. If there is one thing I need to emphasize about the compliance role -- work your ass off and get on good terms with the traders. At the end of the day, the traders want schedulers that are easy to work with and willing to put in the time and effort to adapt.

7/20/12

What are the hours / lifestyle like of these three groups like at the oil companies (compliance, scheduling, trading)?

Also, obviously trading pay will be extremely variable, but what do the compliance and scheduling guys make?

7/20/12

Compliance: (Personal experience)
Hours - 8-5
Lifestyle - fair work/life balance -- personally, I had no life while I worked in compliance, because all I was focused on was first in, last out...finish month end at the highest of my analyst class and kick ass. I ended up getting promoted within 6 months to scheduler based on my hard work, attention to detail, and rapport with traders

Scheduling: (Personal experience)
Hours - 8-5, sometimes 8-4 + Weekends (24 hour access)
Lifestyle - Good work life balance -- able to leave earlier out of the office, but on-call with a work phone in case things come up with logistics. Make sure you schedule everything correctly the first time and meet your customer's demands -- otherwise, you'll have to come back to the office and say goodbye to your weekend. Also, I am out of the office about 15% of the time when not on the phone (during the work day) on site visits/plant visits/ customer visits. In my particular company, this role is a front-office role, your decisions affect the pnl of the traders, and you are responsible for maintaining firm customer relationships

Trading: (2nd hand experience):
Hours - 8 - 4, sometimes 8-5
Lifestyle - Great work life balance when the market is closed or when deals are locked in. At the end of the quarter, a lot of pressured buying will come in -- so these are straight 8-5 days. During the middle of the month, you might play golf with select suppliers/brokers/counter parties to extend the longevity of the business relationship. Expect to go out to lunch at 12 noon and now show back up until 4PM because you were working a deal with a counter party. The majority of the deals are based on relationships -- which means if your broker loves you, you'll get a better deal. Same goes for suppliers.

While I am only a scheduler, I'd like to emphasize that while traders may go out and make deals playing golf -- they know that the ultimate reason why there is an increase in pnl is because you did your job properly -- and they understand that you are in the office connecting all the dots -- expect a big bonus and promotion after working hard in this capacity.

Compensation: Different at every firm --
Compliance: 40 - 50K + sign on bonus/ half year bonus/ eoy bonus / standard of living raise
Scheduler: 50K - 60K + half year bonus/ eoy bonus/ standard of living raise -- expect your bonus to be significantly larger than in compliance -- remember, your actions will absolutely affect pnl of the traders
Junior Trader: 70K - 85K + half year bonus/ eoy bonus / standard of living raise / cut of the book
Senior Trader: 250K base + half year bonus/ eoy bonus/ standard of living raise/ larger cut of the book

**Keep in mind that these stats are based on my personal experience and living in Houston -- where the cost of living is lower than other parts of the country.

7/23/12

Urban Guerilla - This info is gold. Thanks a lot man.

7/24/12

Urban Guerrilla thanks a lot for the information.

But would you, or anyone else for that matter, have any suggestions on actual names of companies where it would be easy to get a start in a compliance, or compliance-related, role?

I know the major banks are out because from what I've heard there is very little movement between the ops/scheduling and trading departments. But which oil companies are best?

7/24/12

In my opinion, I'd say the following companies -- some are big and some are much smaller. Chances are, the smaller the company, the more work you'll have to do to fulfill your role, but the more experience you'll gain over a shorter span of time and add breadth to your resume.This is not always the case, but is the case in my personal experience. See below:

Chevron
Shell
Mansfield
Gavilon
Louis Dreyfus
Astra
Owensboro Grain
Cargill
Koch
Trafigura
Glencore
Mercuria
Vitol
Statoil
ADM
Peter Cremer

**Please note that all of these places should have some form of structure ie. traffic/compliance/back-office, scheduler, trader roles. Also, I do not like to use the term back-office/mid-office/front-office as this is confusing to most. Company A's mid-office role may be a back-office role in Company B. However, compliance/scheduler/trader are generic positions that are generally accepted in the industry.

This list should get you started -- some of these are less bureaucratic than others -- so keep that in mind when applying to each company. Try and get a grasp of the culture of each firm as well as this will play a large role in your development/chance for promotion. If your personality is not honored, then chances are you will not be very successful in gaining promotions/more responsibilities.

7/26/12
Urban Guerrilla:

In my opinion, I'd say the following companies -- some are big and some are much smaller. Chances are, the smaller the company, the more work you'll have to do to fulfill your role, but the more experience you'll gain over a shorter span of time and add breadth to your resume.This is not always the case, but is the case in my personal experience. See below:

Chevron
Shell
Mansfield
Gavilon
Louis Dreyfus
Astra
Owensboro Grain
Cargill
Koch
Trafigura
Glencore
Mercuria
Vitol
Statoil
ADM
Peter Cremer

**Please note that all of these places should have some form of structure ie. traffic/compliance/back-office, scheduler, trader roles. Also, I do not like to use the term back-office/mid-office/front-office as this is confusing to most. Company A's mid-office role may be a back-office role in Company B. However, compliance/scheduler/trader are generic positions that are generally accepted in the industry.

This list should get you started -- some of these are less bureaucratic than others -- so keep that in mind when applying to each company. Try and get a grasp of the culture of each firm as well as this will play a large role in your development/chance for promotion. If your personality is not honored, then chances are you will not be very successful in gaining promotions/more responsibilities.

Little off topic Urban, I do scheduling and often trading of power for a utility on the west coast, I dont know about the company you work at but several of the shops you listed trade power as well. Do you see much lateral movement between gas and power groups? Our gas group is fairly small and does mostly physical trading but I'm looking to get into hydrocarbons, I find that side more interesting. Being in Houston, do you have any thoughts on this?

7/26/12

This is definitely useful info... Thanks urban..

7/27/12

I don't see too much lateral transfer from power to gas, but it can be done. There are many differences between power and hydrocarbons -- one main point is that power is a non-storable commodity where as hydrocarbons (crude oil) can be stored in storage capacities and then arbed out later in the year (depending on the forward curve -- contango or backwardation). In my personal experience, the most power trading I've done was through a simulator via a course I took at Tulane -- Intro to Electricity Power Markets. Monty would be best to ask on the power side.

If you are referring to trading crude -- do it hands down. I am personally involved with bio which is a whole different animal, but crude is here to stay for a good while in my opinion. Let me know if you have any specific questions in regards to hydrocarbons and PM me, I'm more than happy to help.

8/8/13

Urban, would you mind getting in touch with via a PM (don't have enough banana points for that yet). I work for a family office and we are looking to deploy capital with a physical oil trader. I have no idea about that market - would love to have an opportunity to talk... Thanks a lot!

8/1/12

Urban, awesome information!!

In your experience, is location a major issue? I just finished up an MSF in the NE and I want to leverage my prior commodity futures/options trading into one of the entry level positions you've mentioned. I'm willing to move to Houston, NYC (CT) ; essentially I'l move to wherever I could secure one of these positions. After 6 months of applying etc, I'm starting to get the impression that firms recruit very regionally...or that maybe firms don't think I'll work hard since I have 4-5 years of experience trading. Just trying to gain some perspective from anyone who's willing to share their insight.

Thanks again for responding to so many questions. I'll shoot you over some bananas for all the effort.

davel5

8/1/12

If you are not known in the industry most firms will recruit regionally.

At a jr level, its possible to move from power to gas, vice versa or something else.

8/1/12

Location is not a major issue, but it is an issue. I'll give you a quick example -- I went to Tulane, which is not too well known in the NE, but well known in the South. Safe to say I had an easy time knocking down interviews in Houston, but not too easy in NYC/Chi. Also, I am bullish on Houston as I love it here -- the jobs are here, and energy is strong...so I'd advise you to apply to every shop in Houston -- big and small. Also, the experience will count in your favor as long as you pitch well in your interview. One con against the NE when trying to secure a job in the South is the typical question -- why Houston? why energy? If you can't answer these two questions, then stay in the NE. Also, the second question is most important -- why energy. Also, experience (in my opinion) will count for you -- I wouldn't think that companies would question your work ethic based on your experience...the main thing to remember is that with a MSF and work experience, the role will be a little more specific than the typical entry level role -- this of course, depends on the company and where they feel you can add the most value.

8/2/12

Great insight, thanks again. It's obviously a numbers game, because these jobs are sought after by a lot of people, so hopefully if i knock on enough doors one will open.

I saw that someone posted about not enjoying their experience in physical trading, but I couldn't find the post this morning, so maybe it was taken down (or I missed it). Either way, I would be interested in hearing from anyone who tried working on the physical side and didn't like it. For me, I know I liked trading on the financial side (across most of the commodity markets) and I believe that the physical side would be an even better fit for me, but hearing a different perspective is great too. A lot of us are putting a lot of time and resources into securing one of these entry level positions, so hearing an alternative viewpoint could be useful.

davel5

8/2/12
davel:

I saw that someone posted about not enjoying their experience in physical trading, but I couldn't find the post this morning, so maybe it was taken down (or I missed it).

It's in the "is 33 too old" thread.

8/2/12

Thanks, my bad.

It's nice to see so much conversation around phy trading though, no where else on the web to find this stuff. Thanks again for the list of firms.

davel5

8/2/12

No problem -- and there needs to be more information and talk about phys trading. This is where the rubber meets the road. Bullish on Houston, energy, and phys trading.

8/8/13

Urban Guerilla thank you for your insight in to oil and gas trading. I just had a quick question to ask you. How long would you say the typical progression from compliance to trader would take? as in how many years?
thanks hope to hear from you soon.

8/5/12

Good info Urban, thx.

8/6/12

Anyone have thoughts/insight on getting an entry level (ops/scheduling/risk etc) position at a utility vs. a bank or trading firm (like the ones listed above)? In my local area (D.C.) there aren't a ton of opportunities, but the ones that exist are at utilities. I would imagine that a scheduler at a utility has a similar experience to a scheduler at a purely trading firm, is that right?

davel5

8/7/12

I am in DC area as well and you are correct. Most of the jobs here are at utilities. There are few firms with prop trading desks.

8/7/12

I think to get start in physical oil trading, we must first collect all the information about it.

8/7/12
davisheiskell:

I think to get start in physical oil trading, we must first collect all the information about it.

Incredible insight. SB.

"There are three ways to make a living in this business: be first, be smarter, or cheat."

8/7/12

I'm looking at Wash Gas, Constellation (recent merger has shaken things up a bit from traders I've spoken to), DC Energy (seems heavily quant from what I've read). There are some smaller utilities in the area, but I haven't seen positions advertised for anything trading related. What firms have prop desks.

davel5

8/7/12
davel:

I'm looking at Wash Gas, Constellation (recent merger has shaken things up a bit from traders I've spoken to), DC Energy (seems heavily quant from what I've read). There are some smaller utilities in the area, but I haven't seen positions advertised for anything trading related. What firms have prop desks.

Wtf does "looking at" mean. Do you have offers from these place or close to offer?

DC is a pure prop firm. Constellation has prop desks too.

8/8/12
davel:

I'm looking at Wash Gas, Constellation (recent merger has shaken things up a bit from traders I've spoken to), DC Energy (seems heavily quant from what I've read). There are some smaller utilities in the area, but I haven't seen positions advertised for anything trading related. What firms have prop desks.

I'm from the Baltimore region and Constellation has a huge presence at my school. But from what I've heard from both traders, recruiters, and even the CEO (I got to meet him), they are going through some rough regulations etc. with their trading functions, so they can't really hire any entry-level people into risk/ops/etc. I would look into Exelon though they're in PA not too far away.
DC Energy is a great firm though with excellent comp. The quant is not as bad as those options market-making firms but it will be a tough sell if you're not a 3.7+ engineering major.

8/7/12

Similar to my prior question about the differences and similarities of working at a utility vs. phy trading shop (traf, Vitol, etc), are bonuses also a large part of the pay? I'd still be interested to hear thoughts on the difference between a schedulers job at a utility vs a bank or phy trading shop. I assume that bonuses at a utility are more limited, which is fine, just a curiosity.

Thanks again for all the comments/answers

davel5

8/7/12
davel:

Similar to my prior question about the differences and similarities of working at a utility vs. phy trading shop (traf, Vitol, etc), are bonuses also a large part of the pay? I'd still be interested to hear thoughts on the difference between a schedulers job at a utility vs a bank or phy trading shop. I assume that bonuses at a utility are more limited, which is fine, just a curiosity.

Thanks again for all the comments/answers

well for one you arent trading the same things

edit: then the things you are trading are very different and require different skill sets... then they both require different paths that take a long time to get to a trading position.. i have no idea why physical trading has become the most popular thing on here when most people aren't willing to work for (at least) 3 years doing "backoffice" before they might have a chance. and its almost funny how fast those firms (glencore/vitol/traf) cut traders if you arent doing really well.

sorry if this wasnt helpful i'll stop ranting

8/7/12

I'm not sure why physical trading is so popular these days either...although, my guess is that this is the only place to find out anything about the business for those not currently in it. The long term commitment has been mentioned many times and I think it's important for people to keep in mind. Cutting under-performers is pretty much how any trading shop would work, i imagine, so that's just the business.

Anyhow, all comments are helpful, however that did not answer my base-level question of how these firms differ for entry level positions. If you are a nat gas scheduler for a utility that skill set should be applicable to a gas scheduler at BP who works in your region..no? That's more what I meant. I recognize the goals of a utility and a phy shop differ.

davel5

8/7/12
davel:

Anyhow, all comments are helpful, however that did not answer my base-level question of how these firms differ for entry level positions. If you are a nat gas scheduler for a utility that skill set should be applicable to a gas scheduler at BP who works in your region..no? That's more what I meant. I recognize the goals of a utility and a phy shop differ.

Believe or not this will shock you, but the answer is "it depends". Depends on what firm, what assets they hold and what pipes they trade. Some utilities have all sorts of interesting options they can play with so you could learn a lot quickly. At the end of the day, its going to be very tough to beat one of the big trading shops, since they hold the most assets, most optionality etc so your life will be worse and more hectic but you also learn more. While a utility who flows X to Y everyday, yah easy grab coffee bunch of times you ain't learning a ton.

8/7/12

ya what is the big deal about physical trading anyway? the day-to-day does not sound terribly interesting (shipping stuff around to where you think you can sell it for more) and certainly not like "traditional" trading at all. are people just jumping on after seeing the $$$ from the glencore ipo?

(i'm actually serious, i'd actually like to know why everyone is so into physical trading all of a sudden)

6/2/14

I started in physical trading a year or so ago, reason being I had a hunch there were more avenues to generate profit and make money than in "traditional" trading. I have found that be as true as I believed it to be. You can arb time spreads, take advantage of logistic markets, make markets for customers too lazy to make their own, run people's hedge accounts for them who are also too lazy or unsophisticated to run their own, in addition to other avenues of making $$$.

What is nice about this field is that you can actually take a market neutral position and still make cash. Think of us more like "merchants"- guys responsible for buying, selling, and delivering the goods when other people cannot/will not- and less like "traders"... trying to take a directional bet for a quick buck. If you want to load up on a directional bet you certainly can, but in general there are many other additional avenues to make money. And they are also more stable.

Generally when you build a p&l to a specific point of profit, it doesn't go away unless you neglect it. That is the beauty about trading markets that are based on personal relationships.

6/9/14

Been a while since I logged in, and certainly since that post! I would concur...in the business I'm in I've had the opportunity to see two very different ways of making money:

one is very adversarial, clients trade in a speculative style, tight spreads, dealers always getting creamed (this is analogous to trading paper commodities)

the other is much more illiquid, clients are more like investors, heavily based on client relationships, and charging huge bid offer (this is analogous to trading physical commodities)

i leave it to you to guess which one makes more money, with more consistency, and with much less stress. the one upside of the first path is that a profitable trader will be able to trade this same style at a hedge fund, whereas a profitable trader in the second path is somewhat more restricted to the sell-side. of course, we are conditioning this on the trader being profitable (the probability of which is lower in the first path).

all depends on what you like...some people abhor having to schmooze with clients and appreciate the "pure" nature of the first path.

8/7/12

1- not an offer, I meant exactly what I said "looking at" I was focused on larger firms (majors and big trading shops), but then realized maybe looking closer to home makes more sense (mainly because I can actually sit down and have a beer with people). So, I've tried to meet with people at local firms and start building a network. Given this is a tough business to break into, I think that getting to know people and hopefully getting in that way is the best strategy (especially if you're non-target).

2- I can't speak for other people, but the logistical side of the physical trading is what appeals to me. I like the concept of being operationally efficient and gaining profit that way. I traded options and futures for 4+ years and loved it, but I like the added aspect of the relationship building and logistics on the physical side. That's actually one reason I don't mind the time it would/could take to work up to a trader...also why I don't mind the fact that not every traffic/risk guy becomes a trader. The odds are generally against breaking through, so it's probably helpful if you like all aspects of the work. I also think commodities will be the place to be in coming years.

Glencore IPO is nice, and maybe some guys are gunning for that (or making $100 million in a year like Hall), but there are just as many people (or more) making that kind of money in other businesses, so I doubt that's the main motivation for people...maybe it is. I'd prefer if less people were interested physical trading, it would make getting a job a bit easier, haha.

davel5

8/7/12

As monty would say you would lucky to have any of those listed positions. I am not going to tell you or judge what culture/pay/lifestyle works best to suit you. Anyways, just to highlight utility/producer vs trade shop argument a bit more.

A utility always has one goal and responsibility and that is to the rate base at the end of the day. They will never take unwanted, un-nesscary risks a lot of the day-to-day is very routine. The way the trading unit makes their bonus is by best increasing efficiency be it cutting costs or in a riskless manner find a use to an idle asset/load. The people who make the most $$$ in a utility will always be the business development team, sometimes they will also trade/schedule but larger utilities they are above that. If a bd person could find a way for instance make a pipe more useful, or find ways to move around assets during a peak time to a trade shop they could do very well. You will absolutely never see them play a prop role, they work in a risk-less environment.

A trade shop, is inherently give the right to take risk and seek the best reward. Some shops have more prop desks than others. Trade shops do not just look for effiencies, but they also look to profit for them.

Let's say we go into the winter, everyone is setup one way. We have an extremely warmer than normal weeks or month. Loads fall to 60%, utility is mandated to always have near 100% on hand. So the utility is basically long 40% and its sunk, they need a sink hole to get back some value for this load. These sink holes should be the ones created by a trading/marketing shop, without the trade shop the utility would not be able to make back anything, while trade shop may be able to buy that supply on $.80 which they sold for $1 before. Now if we had a crazy cold month, and load went to 120%, the utility does what needs to be to buy that excess and pass on any losses to rate holders, while the trade shop which has a hole may get their ass owned. The utility never takes risk, they just need to best know that market and make sure they are optimial and finding the best way to mitigate costs.

That is really the best example I could come up with right now.

8/8/12

Thanks, that's great.

I've talked to monty, so I know that luck will play a huge role in getting these positions. As I'm currently employed, I have time to keep meeting people, learning more etc.

davel5

8/8/12

Great insight. I was avoiding details earlier, but from the traders I met with at Constellation they were still somewhat concerned about having their jobs, let alone entry level job openings. Sounds like they are moving people around internally etc. I've heard Exelon is a bit more conservative as well, which was one of the concerns for trading. Your thoughts on DC energy are exactly what I thought, very impressive educations for most of the analyst they have. I'm keeping an eye on Exelon in PA and PSEG in NJ.

Thanks for the suggestions.

davel5

8/5/13

Urban Guerilla thank you for your insight in to oil and gas trading. I just had a quick question to ask you. How long would you say the typical progression from compliance to trader would take? as in how many years?
thanks hope to hear from you soon.

8/6/13

Urban Guerilla killing it

8/12/13

urban has more experience than i do but where i work the compliance guys are not front-office bound. If you want to trade, you join a rotational program that gives you experience in scheduling, ops, analytics, etc. then you trade. but going into compliance is a good way to get stuck in compliance. Maybe not that way everywhere, but i have never met a trader that used to be in compliance.

8/16/13

Just an interesting point (I think) - I interned with a guy at an oil supermajor's London office. He decided to go for the graduate scheme, I decided against it (didn't like the company). He began the rotation in Ops last year, he's now in Risk... His internship was in... HR!

3/27/14

hi

I got into commodity marketing a few years ago. Always interested me. The guy kind of brokered deals between say soybeans suppliers to buyers.

obviously crude oil is the biggest market but can't seem any CL suppliers ever needing brokers to peddle their stuff? I think the crude oil market is sewn up. Correct?

What about markets like diesel, jet fuel, Naptha etc? Is there a market outside of the big oil suppliers and trading hoses for this?

As no-one ever gone on their own and set up their own commodity trading company? or are you all seeking a job?

Thank you

6/24/14

Just logged back into my account with too many messages and not enough answers. How long would it take to go from compliance to trader? That's a loaded question with no clear answer -- the real answer is: It depends. I know folks that started in compliance at one of the top energy trading companies in the world -- moved into traffic/ops -- then finally moved into trading -- and probably took about 8 hard earned years. It is different for everyone. The trading positions are so lucrative that you just have to wait for someone to leave -- otherwise, you're stuck in traffic for 4+ years and get a mild bump in salary yoy...so you have to weigh the pro's and cons of staying with the company or jumping shit and banking on your next eager employer to give you a pay raise to get you hired on. Hope this helps.

9/26/14

All good info here. I would agree with the statements. If you can find a TDP out of school that is the way to go. The path from analyst to scheduler to trader is well worn. I have been noticing some gas folks getting more into the crude game. Deals are highly relationship driven and the world is a small one so don't piss anyone off along the way. I once heard a senior crude oil trader stringing a guy along over the phone, decline the deal and hang up. He then looked over at me and said, "That SOB effed me on a deal 17 years ago and I still haven't forgotten. This business is small Rock..." sage advice...

9/26/14

you can definitely transition--a ton of energy traders start out in physical. i've never worked in energy trading, but from what i've read, i think the money-making potential in physical should be almost if not just as good, and the position should be almost if not just as prestigious

9/26/14

trading in general pay well. I am an energy trader

9/26/14

Depends on the firm/fund, its not apples for apples. Depends on the product.

This year has not been kind to funds, some killed in August, some got beaten crap out of them. Outside of 3-4 months this year most financial shops had to really pick their spots. Yes even, JA is having a tough year in 2010.

The top Physical shops have been able to play it strong and steady most of the year, and also take advantage of the little gaps.

9/26/14

any idea how maggi did?

9/26/14

Rumor has it, their whole shop has struggled and taken some tough hits on basis. Then again same thing did happen a bit in summer09 and JA still finished on the top 10 hedge fund earners list.

9/26/14

i heard same so JA and MM funds are both having a tough year

9/26/14

energy trading is definitely lucrative. The tick units and contracts are so huge that only the big boys can play. If you work for a big enough fund that can trade energy, it can be great given all of the non-profit maximizing players (read hedgers) in the space. NG terrifies me. The vol there is insane...

I have a friend who use to buy/sell crude futures for American Airlines and is now working for a fund is CT making 160 base (pretty high for a trader) and took home 650 bonus last year. 26 years old.

9/26/14
KevinNYC:

energy trading is definitely lucrative. The tick units and contracts are so huge that only the big boys can play. If you work for a big enough fund that can trade energy, it can be great given all of the non-profit maximizing players (read hedgers) in the space. NG terrifies me. The vol there is insane...

I have a friend who use to buy/sell crude futures for American Airlines and is now working for a fund is CT making 160 base (pretty high for a trader) and took home 650 bonus last year. 26 years old.

160k base is not high at all.

9/26/14

Can we reach this guy, please connect to me, thank you, the 26 year old, maybe we can do some business with him, and get you a piece of it

monty09:
KevinNYC:

energy trading is definitely lucrative. The tick units and contracts are so huge that only the big boys can play. If you work for a big enough fund that can trade energy, it can be great given all of the non-profit maximizing players (read hedgers) in the space. NG terrifies me. The vol there is insane...

I have a friend who use to buy/sell crude futures for American Airlines and is now working for a fund is CT making 160 base (pretty high for a trader) and took home 650 bonus last year. 26 years old.

160k base is not high at all.

9/26/14

26 is pretty young for trading, no? I'll be that old by the time I graduate.

9/26/14

my current desk has 23,24,26,27,27,29,30,31

9/26/14

No thanks.

9/26/14

If we're already in late 20s and have no hugely related work experience (military, engineering, etc.), what is the best way to break into the commodities industry?

MBA?

9/26/14

If we're already in late 20s and have no hugely related work experience (military, engineering, etc.), what is the best way to break into the commodities industry?

MBA?

9/26/14
Curiousbro:

If we're already in late 20s and have no hugely related work experience (military, engineering, etc.), what is the best way to break into the commodities industry?

MBA?

Same way you would break into any other industry.

1. Show definitive interest (follow markets, aware of developments/news, learn about the industry)
2. Network your ass off.

http://www.jasonbondpicks.com
9/26/14

Glencore
Trafigura
Vitol
Gunvor
Cargill
Noble Group
Mercuria... endless list.

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14

Glencore and Louis Dreyfus have offices in Stamford and MS has their commodities guys in Purchase, NY (I think). As far as London, I'm sure a number of the physical shops have a presence if they're trading metals on the LME.

9/26/14
drstrangelove:

Rising sophomore at a target (queens/ivey) canadian school with some questions about physical commodity trading

1. Are there any physical commodity shops in places like NY or Toronto? Or are they all in Houston/London/Calgary type places?

yes

1a. I'm not a huge fan of calgary, and if I go into this field I'd prefer to be in London. Is it best to try and work in calgary for a bit, get good, and then transfer to London? or should I do an MSF or something at LSE and get a job in london right away?

No, you will not move if good. If you want to work in London focus on that.

2. What the outlook for the industry? I know prop trading and a lot of S&T jobs are kind of winding down, just wanted to know where phys commodity was going

Strong.

3. Do people, for the most part, enjoy the job? I know this is subjective, but most of the S&T guys I've talked to love their jobs, and most bankers hate it or are just view it as a means to an end.

Depends on who you ask and on what day of their pnl.

4. If you find physical commodity trading isn't for you, is it easy to switch into investment banking or buyside or get an MBA or something?

No it is not easy to switch. I seen it happen but can count on one hand

9/26/14

So, if you aren't good at trading or just plain don't like it, is there any kind of exit strategy? I can't imagine they keep you on if you are really shitty at it, or that if you get canned you can't find other work

9/26/14

Keep in mind that they're not going to let you trade right out of school. You'll first rotate in other functions such as scheduling, risk, accounting, etc. If you suck at trading, perhaps you could go back to one of the other middle office roles.

9/26/14

For energy, RBC is the only real shop left in Toronto. Scotia gave up and moved to Calgary/New York. RBC is mainly power too I believe.

For non-energy, there is gigs in Toronto. Scotia has a top notch physical metals team.

9/26/14
marcellus_wallace:

For energy, RBC is the only real shop left in Toronto. Scotia gave up and moved to Calgary/New York. RBC is mainly power too I believe.

For non-energy, there is gigs in Toronto. Scotia has a top notch physical metals team.

Yup, pretty much spot on. RBC has power traders based out of TO and Cincinatti, and oil and gas traders in Calgary. Scotia moved their trading team from NY to Calgary, but (like RBC) has marketers in many other cities (including London). Lots of O&G and utility companies in Calgary have trading and marketing arms too.

I thunk it is a good thing you don't want to move to Calgary... housing prices are already too damn high and I'm looking to buy.

Marcellus, do you know where Scotia's metals guys are based? NY or TO?

9/26/14
oSnap:
marcellus_wallace:

For energy, RBC is the only real shop left in Toronto. Scotia gave up and moved to Calgary/New York. RBC is mainly power too I believe.

For non-energy, there is gigs in Toronto. Scotia has a top notch physical metals team.

Yup, pretty much spot on. RBC has power traders based out of TO and Cincinatti, and oil and gas traders in Calgary. Scotia moved their trading team from NY to Calgary, but (like RBC) has marketers in many other cities (including London). Lots of O&G and utility companies in Calgary have trading and marketing arms too.

I thunk it is a good thing you don't want to move to Calgary... housing prices are already too damn high and I'm looking to buy.

Marcellus, do you know where Scotia's metals guys are based? NY or TO?

Scotia had an energy desk in Toronto. Was a short-lived and not so fun experiment based on what I heard. They trade gold and silver out of Toronto not sure about the other metals.

I already made a post a while back with all the various players in Calgary, basically everyone on the energy side has a presence nowadays.

9/26/14

Sempra Trading is in Stamford as well - so NY suburbs. They do physical trading on various energy underlyings.

9/26/14

Anybody have a list (CapitalIQ or otherwise) that shows the energy trading firms in Houston, Calgary, NYC, etc?

9/26/14

statoil, glencore, freepoint, noble, RBS, UBS, JPM, LDH. Fairfield County has become a small Houston hub so they can deal with Europe and great place to live and raise a family.
I love the energy trading industry!

BADUCH

9/26/14

ScotiaMocatta has a metals desk in Toronto. RBC is building their power desk here at the RBC trading floor

9/26/14

Yeah thats pretty great. If I have no alumni at those places in Fairfield County I'm SOL right? Should I aim to lateral to those places after a stint in Canada or after some sort of masters program?

9/26/14

Nobody is left in London. Everybody has moved to Geneva except for Glencore who is still in Baar, and Trafi in Luzern.

Go in as early as you can and get on their graduate programmes if you can. This is the best way to learn. Don't go into a hedge fund first thing as you won't learn anywhere near as much and will then be competing with a million other bank folks with the same skillset, hunger, and lack of first hand experience. There are commodities other than energy and they are easier to get into.

Work straight in the HQ for your continent as this is where they train the traders.

9/26/14

BB's tend to go for the top tier colleges both in the UK and US but these physical trading houses don't seem to be specific with who they hire as long as they're or really good at what they do (hire them young as well to teach them) or are extremely well connected and get in to the firm this way. Other than that, yes, you will see Harvard/Oxford graduates working in these firms but you will also see University of Illinois students as well (no disrespect, first thing that came up).

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14

It's also very location centric. The major physical commodity trading houses are in Houston, Rotterdam, and Singapore, so think about strong regional schools there (Texas A&M, Tulane, Rotterdam, SMU)

But I agree with SonnyZH's sentiments.

the hunger for more

9/26/14

Could you please tell me which university in Rotterdam ?

9/26/14

TassosTavatides:
Could you please tell me which university in Rotterdam ?

This one:
http://rankings.ft.com/businessschoolrankings/rsm-...

If you really want to break into physical trading this programme looks quite cool:
http://www.tradingmaster.ch/modules/trading.html

9/26/14

Do you mean the Msc Supply Chain Management at Rotterdam University? Isn't that a bit off? I mean do commodities firms of the majors recruit from there? As for the Geneva programe the require you to work at commodities firm in order to accept your application, plus it's really difficult to find a house in Geneva and Switzerland in general. I had my eye at an Msc offered by Cass University London ( Msc in Shipping Trade and Finance). Has anyone been there or heard of it? I would appreciate any feedback.

PS I can't post the url because I am new to the site please check it out with a quick google search

9/26/14

TaTa:
Do you mean the Msc Supply Chain Management at Rotterdam University? Isn't that a bit off? I mean do commodities firms of the majors recruit from there? As for the Geneva programe the require you to work at commodities firm in order to accept your application, plus it's really difficult to find a house in Geneva and Switzerland in general. I had my eye at an Msc offered by Cass University London ( Msc in Shipping Trade and Finance). Has anyone been there or heard of it? I would appreciate any feedback.

PS I can't post the url because I am new to the site please check it out with a quick google search


Rotterdam was big in commodities 30 years ago, that guy was speaking out of his butt. As far as Geneva goes, housing isn't really a cause for concern. If you get into school there you will find something. You don't need to be working for a commodity trader there, the school helps you find a position if you don't have one lined up.
9/26/14

TaTa:

Do you mean the Msc Supply Chain Management at Rotterdam University? Isn't that a bit off? I mean do commodities firms of the majors recruit from there? As for the Geneva programe the require you to work at commodities firm in order to accept your application, plus it's really difficult to find a house in Geneva and Switzerland in general. I had my eye at an Msc offered by Cass University London ( Msc in Shipping Trade and Finance). Has anyone been there or heard of it? I would appreciate any feedback.

PS I can't post the url because I am new to the site please check it out with a quick google search

Hello,

Both are very good. It's either...or...

Geneva: Very good program, fairly new (I was told that a few people from the faculty are coming from Cass). Good thing is that you get experience by working part time. Top companies recruit (Cargill, Mercuria, vitol, BNP, Noble, ADM,...). Tried to get in, but got rejected because of low GMAT. Application currently closed. Apply next year, smart choice!

Cass: Retook GMAT, got better score, starting in September (application still open).
Expensive, full time, more people in classes, bad weather.
Bigger network, more events, more classes to choose from. You can also follow the "Energy" track if that is what you are into.

9/26/14

LoudjiZ:

TaTa:

Do you mean the Msc Supply Chain Management at Rotterdam University? Isn't that a bit off? I mean do commodities firms of the majors recruit from there? As for the Geneva programe the require you to work at commodities firm in order to accept your application, plus it's really difficult to find a house in Geneva and Switzerland in general. I had my eye at an Msc offered by Cass University London ( Msc in Shipping Trade and Finance). Has anyone been there or heard of it? I would appreciate any feedback.
PS I can't post the url because I am new to the site please check it out with a quick google search

Hello,

Both are very good. It's either...or...

Geneva: Very good program, fairly new (I was told that a few people from the faculty are coming from Cass). Good thing is that you get experience by working part time. Top companies recruit (Cargill, Mercuria, vitol, BNP, Noble, ADM,...). Tried to get in, but got rejected because of low GMAT. Application currently closed. Apply next year, smart choice!

Cass: Retook GMAT, got better score, starting in September (application still open).
Expensive, full time, more people in classes, bad weather.
Bigger network, more events, more classes to choose from. You can also follow the "Energy" track if that is what you are into.


How much was your gmat score? I think Cass doesn't require GMAT
9/26/14

TaTa:

LoudjiZ:

TaTa:
Do you mean the Msc Supply Chain Management at Rotterdam University? Isn't that a bit off? I mean do commodities firms of the majors recruit from there? As for the Geneva programe the require you to work at commodities firm in order to accept your application, plus it's really difficult to find a house in Geneva and Switzerland in general. I had my eye at an Msc offered by Cass University London ( Msc in Shipping Trade and Finance). Has anyone been there or heard of it? I would appreciate any feedback.
PS I can't post the url because I am new to the site please check it out with a quick google search

Hello,
Both are very good. It's either...or...
Geneva: Very good program, fairly new (I was told that a few people from the faculty are coming from Cass). Good thing is that you get experience by working part time. Top companies recruit (Cargill, Mercuria, vitol, BNP, Noble, ADM,...). Tried to get in, but got rejected because of low GMAT. Application currently closed. Apply next year, smart choice!
Cass: Retook GMAT, got better score, starting in September (application still open).
Expensive, full time, more people in classes, bad weather.
Bigger network, more events, more classes to choose from. You can also follow the "Energy" track if that is what you are into.

How much was your gmat score? I think Cass doesn't require GMAT

9/26/14

LoudjiZ:

TaTa:

LoudjiZ:

TaTa:
Do you mean the Msc Supply Chain Management at Rotterdam University? Isn't that a bit off? I mean do commodities firms of the majors recruit from there? As for the Geneva programe the require you to work at commodities firm in order to accept your application, plus it's really difficult to find a house in Geneva and Switzerland in general. I had my eye at an Msc offered by Cass University London ( Msc in Shipping Trade and Finance). Has anyone been there or heard of it? I would appreciate any feedback.
PS I can't post the url because I am new to the site please check it out with a quick google search
Hello,
Both are very good. It's either...or...
Geneva: Very good program, fairly new (I was told that a few people from the faculty are coming from Cass). Good thing is that you get experience by working part time. Top companies recruit (Cargill, Mercuria, vitol, BNP, Noble, ADM,...). Tried to get in, but got rejected because of low GMAT. Application currently closed. Apply next year, smart choice!
Cass: Retook GMAT, got better score, starting in September (application still open).
Expensive, full time, more people in classes, bad weather.
Bigger network, more events, more classes to choose from. You can also follow the "Energy" track if that is what you are into.

How much was your gmat score? I think Cass doesn't require GMAT

Well, they tell you to send gmat scores if available...I am a non native English speaker, I did not have a lot of quant classes either, that might explain. I got a conditional offer provided that I get more than 600 (For Geneva I got 560 two months ago, which is technically enough, since they require only 500. Chances are next year they will raise it to 600). Always aim higher so you don't get stuck!

Best bet concerning schools, always call the admission officers, alumni; chances are that you might get info that are not officially on the websites.

As always they will look at your overall profile, for both schools some people with lower/higher scores got rejected/taken. Just do your best.

.cass.city.ac. uk /courses/masters/apply/gmat

9/26/14

As said, both are really good. Actually there aren't others similar Masters offer in Europe.

The selection to be enrolled in the Master trading program HEC Geneva is quiet selective.
Indeed, last year only 20% of all applicants (119) received an offer. Class size are small, around 30 students of divers backgrounds. The gmat score above 500 required seems easy to get for everyone.

Regarding the Msc Trade, Shipping & Finance the GMAT is not mandatory because it's not a pure Finance class, although if you've got a high GMAT would be useful to signal it.

Next year, I'm certainly going for one of those. I think be part of those programs is highly useful to make the first step into the commodity area.

Trust in you !

9/26/14

You must be kidding when you say housing in Geneva isn't a cause for concern...

9/26/14

bengigi:
You must be kidding when you say housing in Geneva isn't a cause for concern...

I'm saying if you have a job there or are going to school there, you will find a way to make it work, even if it means commuting from France. Making the difficulty of finding housing the reason you don't pursue what might be your best shot at the career you are interested in is silly.
9/26/14

GoodBread:
bengigi:
You must be kidding when you say housing in Geneva isn't a cause for concern...

I'm saying if you have a job there or are going to school there, you will find a way to make it work, even if it means commuting from France. Making the difficulty of finding housing the reason you don't pursue what might be your best shot at the career you are interested in is silly.

Agreed.

9/26/14

bengigi:
You must be kidding when you say housing in Geneva isn't a cause for concern...

If ur not able to make the "effort" to commute from france to geneva every day, I dont think you have the motivation for such a job.

From what i heard the rotterdam msc in finance is good; i have no idea about the logistics one....

The commodities master in geneva is very good, but a bit of a double edge-sword. You have to secure an internship within a firm related to the field ur studying (shipping or commodities duh) in order to get into the programme. So in the extreme case that you get conditionally accepted by HEC geneva and not manage to get an internship, ur pretty much dead in the sense that you will not be able to attend the classes there.

On the positive side, the internships in geneva are most likely paid and the firm that takes you partly finances the studies at HEC so thats quite good.

9/26/14

16rl:
bengigi:
You must be kidding when you say housing in Geneva isn't a cause for concern...

If ur not able to make the "effort" to commute from france to geneva every day, I dont think you have the motivation for such a job.

From what i heard the rotterdam msc in finance is good; i have no idea about the logistics one....

The commodities master in geneva is very good, but a bit of a double edge-sword. You have to secure an internship within a firm related to the field ur studying (shipping or commodities duh) in order to get into the programme. So in the extreme case that you get conditionally accepted by HEC geneva and not manage to get an internship, ur pretty much dead in the sense that you will not be able to attend the classes there.

On the positive side, the internships in geneva are most likely paid and the firm that takes you partly finances the studies at HEC so thats quite good.

You can find an accomodation in Geneva. It will costs you a lot of money but you definitively can.
Second for the master you have to secure an internship yes, but only after knowing if the univ accepted you.
One could reasonably think that its in the univ interest to help its students to secure an internship.
Third the firms that take you part time for the program MUST finance your tuittion fees.
You will likely get paid but here there isn't any obligation, you have to negociate.

9/26/14

TheSquale:
16rl:
bengigi:
You must be kidding when you say housing in Geneva isn't a cause for concern...

If ur not able to make the "effort" to commute from france to geneva every day, I dont think you have the motivation for such a job.

From what i heard the rotterdam msc in finance is good; i have no idea about the logistics one....

The commodities master in geneva is very good, but a bit of a double edge-sword. You have to secure an internship within a firm related to the field ur studying (shipping or commodities duh) in order to get into the programme. So in the extreme case that you get conditionally accepted by HEC geneva and not manage to get an internship, ur pretty much dead in the sense that you will not be able to attend the classes there.

On the positive side, the internships in geneva are most likely paid and the firm that takes you partly finances the studies at HEC so thats quite good.

You can find an accomodation in Geneva. It will cost you a lot of money but you definitively can.
Second for the master you have to secure an internship yes, but only after knowing if the univ accepted you.
One could reasonably think that its in the univ interest to help its students to secure an internship.
Third the firms that take you part time for the program MUST finance your tuittion fees.
You will likely get paid but here there isn't any obligation, you have to negotiate.

9/26/14

connections.

9/26/14

People say that once you are in OPS you are stuck there. but don't take my word for it

9/26/14
Ihavenoclue:

People say that once you are in OPS you are stuck there. but don't take my word for it

I have heard that, that's why I am desperately trying to find any other Financial area where your time in BO could be considered useful... I have heard that its useless for FO, MC, and even the top Business Schools wont give a shit about it if its on your resume when applying for a masters...... FUCK.

9/26/14

I really have little idea what is considered FO at the CME in this day and age of digtal life.

That said, I would be careful in stating "ops is a dead end or not good department" in the physical trading world. Certain ops/middle-office jobs are the closest you will get to front-office. Certain physical products you need to know the ground level and the only way to learn that is in the middle-office. Unlike financial products you cannot just go on a desk and be an analyst at times without any real physical knowledge or luck.

9/26/14

Yes, interns usually start in ops/logistics departments in trading houses. Regarding an IB ops internship, I'm not sure if that would enhance your application or not but I guess its better to have SOMETHING.

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14

Physical commods trading, you usually rotate through ops/traffic because understanding all that is KEY.

Anyone who says ops is dead end is clueless... I have traders and sales people on my desk who were from back and middle office before...

takes luck, time and is definitely difficult, but not impossible...

9/26/14
monkeymark:

Physical commods trading, you usually rotate through ops/traffic because understanding all that is KEY.

Anyone who says ops is dead end is clueless... I have traders and sales people on my desk who were from back and middle office before...

takes luck, time and is definitely difficult, but not impossible...

Would that be the same if you were in IBD? I'm aware of the importance of understanding operational logistics/shipping/deal execution to perfection in physical commodity trading houses but not sure about it in banking.

Other than that, how long does it usually take for graduates to progress to traders - does it depend on each firm or is this process ''standardized''?

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14
SonnyZH:
monkeymark:

Physical commods trading, you usually rotate through ops/traffic because understanding all that is KEY.

Anyone who says ops is dead end is clueless... I have traders and sales people on my desk who were from back and middle office before...

takes luck, time and is definitely difficult, but not impossible...

Would that be the same if you were in IBD? I'm aware of the importance of understanding operational logistics/shipping/deal execution to perfection in physical commodity trading houses but not sure about it in banking.

Other than that, how long does it usually take for graduates to progress to traders - does it depend on each firm or is this process ''standardized''?

No clue about banking, so can't really comment there. The only people I would deal with on the banking side are the GCM people, usually for debt issues.

usually 2-3 years, but definitely not standardized...

9/26/14

Chiming in on the importance of operations/logistics when trading physical commodities. No one is going to let you trade a bbl on a book if you don't understand freight spreads/logistics.

9/26/14
blender:

Chiming in on the importance of operations/logistics when trading physical commodities. No one is going to let you trade a bbl on a book if you don't understand freight spreads/logistics.

Are there any mining books you could recommend? I've found the access to futures/physical trading oil books really easy but haven't been able to find any 'decent' metals-minerals books yet. Thanks in advance.

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14

So the general consensus is that an Ops internship probably will enhance my application for such positions?

9/26/14
BulgeBracket:

So the general consensus is that an Ops internship probably will enhance my application for such positions?

Yes. Some of the most prestigious physical trading training programs (for energy) are essentially rotational programs through things like scheduling, risk management, shipping, etc, etc. While at an IB these won't be as important, as you're trading mostly financial (in a more tradition S&T role at least), at a physical shop they are pretty much mandatory.

9/26/14

At my firm; My boss (metals) started off in traffic at Phibro, the head of softs started in traffic at EDF Man, the head of grains started of in -you guessed it- traffic at Cargill.

Anyone who says ops is dead end doesn't have a clue about of physical trading works.

9/26/14
contagoman:

At my firm; My boss (metals) started off in traffic at Phibro, the head of softs started in traffic at EDF Man, the head of grains started of in -you guessed it- traffic at Cargill.

Anyone who says ops is dead end doesn't have a clue about of physical trading works.

Def. not the norm. It does happen though and is possible although the odds are certainly against you. Just depends on the hustle and hard-work of the person in the Ops position. Most just become content and settle in the role

9/26/14
Revolution:
contagoman:

At my firm; My boss (metals) started off in traffic at Phibro, the head of softs started in traffic at EDF Man, the head of grains started of in -you guessed it- traffic at Cargill.

Anyone who says ops is dead end doesn't have a clue about of physical trading works.

Def. not the norm. It does happen though and is possible although the odds are certainly against you. Just depends on the hustle and hard-work of the person in the Ops position. Most just become content and settle in the role

I personally wouldn't hire someone into a physical trading role if they didn't have hands on experience in ops. If you're actually trading physical (not just paper) you HAVE to know the ins and outs of logistics/documentation/etc...

Best Response
9/26/14

Knowing about chartering/logistics and/or trade finance is a definite bonus for moving onto the trading desk at a pysical firm. If you can't get a summer internship with Trafigure/BP/Glencore (only people I know who offer those), then network your ASS off and try and get something at a place that doesn't have an online summer internship application thing; most of the big ag firms still have summer interns (Bunge, Cargill, Nidera, Louis, etc...), they just don't do OCR/online apps.

If that doesn;t work, hit up shipbroking desks and or banks with trade finance arms. Being in Europe you have a bit of an advantage here. Most commodity trade finance is handled by European banks (BNP, DB and Standard Chartered are particularly big).

If THAT doesn't work out, you could try either research work with some of the trade publications (Kinsgman for sugar, Metal Bulleting for metals, Platts for Oil & gas, IHS for Coal, etc...), or research at a commodity futures brokerage firm.

If all esle fails, try warehousing companies (i.e. Steinweig, Henry Bath, etc..). You'll get valuable insight into how commodities are stored, handled, transhipped, etc... Very useful in metals and softs (cocoa, coffe, etc..)

PM me if you want any more advice

9/26/14

Amazing stuff man. I'm going to have to buy some SBs for you.

9/26/14

SB's?

9/26/14

Silver bananas. Just giving you props for that response (and thank you for the credits, powers that be).

9/26/14

oh i see, thanks.

where are you located by the way, i might be able to suggest some good firms in the area

9/26/14

the problem is that other than agriculture, you have to go abroad. You don't want to work in satellite offices for the big companies.

9/26/14
ampeypua:

the problem is that other than agriculture, you have to go abroad. You don't want to work in satellite offices for the big companies.

ya, honestly, its not like houston is known for energy trading or anything.

9/26/14

If you want to trade soft/grains, you'll have to spend a stint in the corn/grain belt. If you don't know how a grain elevator or hopper car moves, chances are you won't be a good phys trader.

Look at ADM, Cargrill, Noble, Trafigura, Glencore, Bunge, Vitol or Global.

9/26/14

yes. Houston obviously has energy trading.

The point is that at large physical shops, the headquarter is typically in Europe. I hear guys in satellite offices often say that from a pure career perspective it's much better to be in HQ (comp is better, information flow is better, major decision making occurs there). I work on the metals/mining side at a large place and I can tell you that's certainly the case. In a few convos i've had with some guys in oil/gas, it's not as pronounced but they do feel that way as well. For example, at my place, it's really London and Singapore which are the hub of the action for oil/gas. The culture is that the guys in HQ call the shots and establish the culture. Guys in satellite offices can be somewhat autonomous (all case specific) but need to listen to the boss.

9/26/14

Please allow me to enter a question: how does someone new to the trading business actually gets inside the business, gets to understand it without working for a trading firm?

"Striving path for a sustainable future"...

9/26/14

that;s a good question, can anyone aswer it in detail?

9/26/14

Mikuka:
Please allow me to enter a question: how does someone new to the trading business actually gets inside the business, gets to understand it without working for a trading firm?

I am also interested in this.

9/26/14

hustle

9/26/14

ampeypua:

The point is that at large physical shops, the headquarter is typically in Europe. I hear guys in satellite offices often say that from a pure career perspective it's much better to be in HQ (comp is better, information flow is better, major decision making occurs there). I work on the metals/mining side at a large place and I can tell you that's certainly the case. In a few convos i've had with some guys in oil/gas, it's not as pronounced but they do feel that way as well. For example, at my place, it's really London and Singapore which are the hub of the action for oil/gas. The culture is that the guys in HQ call the shots and establish the culture. Guys in satellite offices can be somewhat autonomous (all case specific) but need to listen to the boss.

Counts when trading both happens in HQ and regional offices. Otherwise, HQ just does corpfin, taxes, accounting... They might develop some rules, policies, etc., (listen to the boss), but if they don't trade in the HQ and you're looking for trading - check where it happens.

9/26/14

Risk.

9/26/14

Operations: scheduling/trafficking--they keep track of product movements, inventories, nominations and the day-to-day balances for spot markets.

Risk: PnL, VAR, MTM and other position reporting.

Both are very important, you can't really be a physical trader without knowing either end. If I had to choose one i'd go with operations--from experience (particularly physical) I have seen more operations folks break into trading.

9/26/14

Thanks Blender. Thats what I heard also from other commodity traders, start in ops and work your way up. (confusing since its a big no no in IB's)

In terms of volume, what would be considered a "small" shop ? I am looking at one with 6 million tons of bulk per year, it seems to me that its small, but not sure (they trade coal, iron ore, bauxite, clinker and gypsum). Trafigura claims to be at 60 million tons per year, I dont know if thats a reliable figure either.

9/26/14

I'd say size is determined by your shop's % of the overall market and as usual, it depends on product. 6 million tons for coal is definitely on the smaller side--I don't know about gypsum or metals (I trade energy). Trafigura is a huge trading company (up there with Glencore) and they definitely are a large trading shop in the metals and energy markets.

I would't be too concerned about size--unless you are in a graduate trading program, it's difficult to go from operations to trading in any physical shop. IF a smaller shop will give you more responsibility and experience, I'd definitely go with them.

9/26/14

Just realised I never thanked you for your posts so there you go, two silver bananas :)

9/26/14

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9/26/14

I would look towards the operations/traffic route if you can over risk. I think you learn more about physical trading through traffic. While it's certainly useful to understand where the money's made and how trades are valued and hedged, risk involves a lot of matching (did the system calculate this right?) and plugging numbers into excel. If you end up it traffic, you'll be talking to people at the companies you'll eventually be trading with, you'll have to prepare documents (LCs etc.) that traders need to understand and you'll learn all about export credits, where the commodities flow (the main producers, wells/mines, the major buyers in each geographical region, who trades what) which I think is much more useful to know. That being said, most shops will rotate you through both.

As far as size goes, it really depends, places like Trafi/Glencore trade a wide variety of products whereas there's lots of smaller specialized firms (only grains, only metals etc.) which on an individual desk basis are just as competitive. I've mostly seen firms ranked by revenue, most good shops will make over 10bn while the big companies hit 100.

9/26/14

You're talking about two completely separate tiers. BB S&T and physical trading (I'm assuming someone like BP or Cargill) are on a different level than the types of prop shops you're talking about. Not even comparable.

9/26/14

So in terms of exit opps and prestige you're saying

Hedge fund >>Jane Street/DE Shaw >> Goldman/JPM S&T (no specific group, just average them all) > > BP/Cargill >> Put down your own money propshop

9/26/14
In_The_Money29:

So in terms of exit opps and prestige you're saying

Hedge fund >>Jane Street/DE Shaw >> Goldman/JPM S&T (no specific group, just average them all) > > BP/Cargill >> Put down your own money propshop

Well, to start, DE Shaw is a multi-strategy hedge fund... and not all hedge funds are better than Goldman / JPM S&T... and some physical desks are better than Goldman / JPM... I could go on and on

You really just can't compare. Stop playing the hypothetical game and see if you can get an offer anywhere first.

9/26/14
In_The_Money29:

So in terms of exit opps and prestige you're saying

Hedge fund >>Jane Street/DE Shaw >> Goldman/JPM S&T (no specific group, just average them all) > > BP/Cargill >> Put down your own money propshop

You're an idiot if you want to go into trading for the "exit opps". This isn't IB

9/26/14

When we "assume" we make an ass out of you and me. Your question is idiotic. No one ranks trading shops like that. There is no such thing as prestige or real exit opps in trading. Your exit op, is to keep trading.

9/26/14

That's like saying no one ranks IB/PE/VC all together when everyone clearly does.

9/26/14
In_The_Money29:

That's like saying no one ranks IB/PE/VC all together when everyone clearly does.

Bank prestige is important for those businesses. It isn't for trading, that's the difference.

9/26/14
In_The_Money29:

That's like saying no one ranks IB/PE/VC all together when everyone clearly does.

More proof you an idiot. Keep it coming.

9/26/14

"To specify type of propshops, think non quant, but the type where you need to put down your own money."

Clearly troll post. Plus, I gotta agree with MW- your P/L is your prestige in trading.

9/26/14

From my experience physical trading shops are supposed to be very though. You can never expect to start of as a trader and would have to do a few years in traffic before you can even dream of starting off as a trader, which again is pretty political. But at the other hand the upsides ones you are a trader are huge, I mean think of it as GS before it became public and you're in the partners rank...

9/26/14
WillyStrohhutte:

From my experience physical trading shops are supposed to be very though. You can never expect to start of as a trader and would have to do a few years in traffic before you can even dream of starting off as a trader, which again is pretty political. But at the other hand the upsides ones you are a trader are huge, I mean think of it as GS before it became public and you're in the partners rank...

If you were an undergraduate with a choice between S&T or IBD who would like to work FT in physical trading shops (Glen, Traf, Gunvor, etc.), which path would you choose?

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14

MW/MD hit it on the nail.

IB/PE/VC have more prestige factors since clients/deals might be wooed by reputation. Exit opps for trading is trading and your prestige is PnL.

If you can make money and have a track record of making money, no desk/firm is really going to care about your school or past pedigree.

9/26/14

There are people making the transition from both S&T and IBD, the main criteria is obviously wether you have exposure to the products they trade or not. I would say if you are in S&T and you're actually prop trading it's relatively easy to transition to the physical shops as they all also have prop trading activities, even if you don't have any exposure to the products they trade. If you're in IBD, then having exposure to mining companies / Oil & Gas / Natural ressources etc is really important I think. You also need to keep in mind that if "physical trading" is what you want to do, even after a couple of years at a top tier BB like GS / JPM, you would not step in as a physical trader. You would most likely start be an assistant-trader, and if you're lucky you don't have to wait too long to become a trader. You're also always going to lack the knowledge that most other traders have from working in operations etc.
In short, if you really want to be in physical trading what you need to look for is opportunities to work in operations in one of the top shops. It's pretty hard to get in without knowing someone and you'll likely have to cold call a lot of people etc to get in, but what I hear from senior people in the industry is that it's the best way if you want to become a succesful trader.

9/26/14

..

9/26/14
costofcarry:

The S&T Experience might be slightly more relevant but I'd choose IBD because of the skills you learn.

I don't agree. Unless you are covering the commodity industry in great technical detail, I don't see any skills that help you a great deal in physical trading. A S&T background would, as said before, leave you with a gap in operational and logistic skills - no less so for an IBD guy, but brings some advantages as well. Every major and physical trading firm is also active in the paper market. Cargo traders often decide to hedge their physical position in the paper market and some are allowed to use paper for speculative positions. S&T experience would be benificial in this regard, and would allow you to focus on addressing your weaknesses on the physical/operational side rather than coming to grips with the basics of trading first.

From a hiring perspective too, I'd say that a markets guy has a much stronger case arguing he has the hunger to be a commods trader than an IBD guy

9/26/14

..

9/26/14

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9/26/14

Why is this thread still alive?

Anyways, to update on new comments. Financial modeling skills are absolutely useless. Investment banking teachs you to make powerpoint slide decks and work many hours without sleep. Two utter useless skills.

Fundumental analysts at WoodMac, Bentek, PIRA, internal fundamental guys use some financial modeling skills. But those are more econometric models used to figure out the actual breakeven costs, or to model future production, or model weather, or statistics. Again skills no banker would ever come across.

The guy in contracts in mid-office is more useful than a banker. Investment banking is absolutely useless to this type of work. That said to go from physical shop to banking the other way around is not so hard or uncommon, obvious reasons being the same way a med student can goto a healthcare banking group.

9/26/14

I think physical trading shops would be the way to go - that way, if your PnL sucks, you can at least have marketable skills in other potentially well paying areas.

If you blow up at a prop shop, who cares that you went and played at a casino for a few years?

9/26/14

I wouldn't be concerned about the degree, as there are many business majors too with absolutely no before-hand technical knowledge - on the material science/chemicals side - until they start working.

I too thought S&T would be a perfect path to follow (assuming you're on a commodities desk) but if I were you I'd go directly into the industry (if you're serious about transitioning from paper to physical) through graduate programs i.e. Trafigura's for example and see how it goes.

On a related note, GS has a great oil desk but majority of their traders are ex-BP. They don't have any presence in physicals though. MS on the other hand has a dedicated physical desk that do both crude and refined products trading. BarCap London also a huge player in commods, and JPM not far behind (acquired big LME steak post-MF Global and also bought some warehousing facilities from RBS few years ago. However they are lagging behind a bit in energy).

The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.
9/26/14

Agree with SonnyZH. I am currently interviewing with one of the big 3 ( Glencore, Trafigura, Vitol) and the traders I have talked to all had different degrees. I think your best bet would be to get your foot in the door and work your way up. All 3 shops like to promote from within. Glencore seems to do this the most, while Vitol has been hiring a lot of experienced traders from BP, Shell, and the major banks recently

Also if you want to trade crude, some of the Chinese companies like PetroChina and Unipec have really been building up there trading desks. You may want to look at them.

9/26/14

sent PM

9/26/14

Wait how much IB experience do you have?

9/26/14

I have 3 yrs in IBD at a bulge bracket office in Asia (focused mainly on cross-border M&A)

9/26/14
9/26/14

its not super uncommon... i knew a few people at my former firm that did banking before trading.

9/26/14

You should definitely take a calculus based probability class. I've noticed a lot of brain teasers people see in interviews involve probability.

It would be wise to take and do well in the following courses if you decide you want to go to graduate school for a math finance program:
Calc 1-3, Linear Algebra, ODE, Probability, and Math Stat.
Taking Numerical Analysis, PDE, Real Analysis, and Stochastic Processes should also help.

It just gives you more options after your undergrad degree.

9/26/14

Any advice as far as making it to the initial interview?

9/26/14

This questions pops up frequently.

You are a freshmen and there is a very long road ahead of you to have a chance of becoming a physical trader.

1. Above all, have an active interest in the physical commodity markets. This goes beyond perusing Bloomberg every day but extends into reading research reports, keeping track of important forecasts and formulating your own opinion on the market--it doesn't have to be the right opinion but just your own.

2. Dispel any thoughts of "GPA/major required" and "competitiveness" for the trading roles--they are freaking competitive and you should strive to maintain the highest GPA possible without your extracurrics/market studies suffering. There really isn't a downside to having a higher GPA if you can maintain everything else. Majors don't matter too much but a technical (math/science/CS/engineering) degree shows that you are quantitative/can program, which is never a bad thing. Finance/accounting is fine too but just make you have some analytic skills. Also--IF your university offers any classes on agronomics, weather modeling or refining economics, that can give you can edge.

3. Repeat # 1 and network your ass off.

4 Repeat # 3

9/26/14

Do oil and gas companies hire summer analysts for physical trading?

9/26/14

Yes and no. Some of the majors hire into their trading groups, but you're usually interning in what most people consider "back office" even though in physical, this becomes front/mid office. IE, you won't be a "trading" intern. You'll be on their risk/deals/scheduling/transportation/shipping/logistics/etc desk. Because honestly, you don't know shit about physical trading.

I'm not saying that in a "you're worthless" way. I hardly know anything and I'm interning at one of the big 3 physical shops. You would simply have no idea what these physical traders are doing and would have no idea how to help them, as physical trading is much much much different than simply looking at a company and deciding whether or not to buy a stock. There is so much that goes into moving physical product around that if you don't understand all of the roles you potentially intern in, there is no possible way you can trade.

Most rotational programs at places like the oil majors, Glencore/Vitol/Trafigura/Louis Dreyfus/etc/etc do not put you in any "trading roles." Rather, you'll do 6 months in risk, 6 months in credit/deals, 6 months in shipping, and then they'll consider you for a junior trader position, because only then will you understand everything necessary to begin learning about the trading.

9/26/14

What firm is giving off every 5th week and why?

Get busy living

9/26/14

from the handful of industry folks ive spoken with, it is part of a standard 5 week rotation of 12-hour shift work

1st week = 4 days normal hours
2nd week = 4 days 5am-5pm
3rd week = 4 days 5am -5pm
4th week = 3 days 5am 5-pm, 3 nights 5pm-5am
5th week = 7 days off

this is taken from 1 person i spoke with, but every person i spoke with in this role had this type of schedule... there might be some alternating between more night shifts than day shifts every other set

9/26/14
MonkeyDoodoo:

from the handful of industry folks ive spoken with, it is part of a standard 5 week rotation of 12-hour shift work

1st week = 4 days normal hours
2nd week = 4 days 5am-5pm
3rd week = 4 days 5am -5pm
4th week = 3 days 5am 5-pm, 3 nights 5pm-5am
5th week = 7 days off

this is taken from 1 person i spoke with, but every person i spoke with in this role had this type of schedule... there might be some alternating between more night shifts than day shifts every other set

Agree with [the highly qualified opinion of] above poster. I don't know much about trading, but this is what a friend of mine back home did for the first three years as a trader...minus the time off. If you REALLLLLLYYYYY want to do trading, go for it I guess, but it took a severe toll on my friend and their health hasn't recovered yet...

Get busy living

9/26/14

working shift is not fun and it has became a career job so I would stay in finance

9/26/14

Appreciate the input (shoutout to monty who's given me a shit ton of info over the past two years). My main argument has been that I already work 12-15 hour days on average, so the hours/shift, specifically, won't be a problem. But I do admit that my work day always starts at ~6am, vs. alternating btwn days and nights - so I am likely underestimating the effect the switching can have.

As far as your friend not having the week off, that part is huge for me in making this any kind of decision! haha

9/26/14

Physical trading in my opinion. "Model & bottles every 5th week"
At the end of the day it really depends on your lifestyle.

RedBear

9/26/14

it is not a 40 hour week and 5th off... its a lot more hours... you are also talking about real time power trading

9/26/14

Also interested in trade off (no pun intended) between phys trading and ER and commodities research (fundamentals)

9/26/14

I'd listen to Monty on this one... ER to real time power is a terrible career move. Trading real time power in no way guarantees that you will one day be trading term.

9/26/14

Agreed with comments on real time trading, not sure why it keeps coming up. Real time power trading can often be secured straight out of college/uni. It's a decent job, but definiltey not in the same category as other physical trading type jobs. ie: trading term power, gas, oil, etc. It's probably closer to a 'scheduling' job and as you're just balancing the market constantly (not a great analogy, but hopefully gets the point across).

Now what do people thing about phyiscal trading (other than real time power) vs ER in same industry. Does one offer a better trade off than another, especially if you are intersted in and capable in both and can potentially / reasonably have a shot at either?

9/26/14

globalmacro:
Agreed with comments on real time trading, not sure why it keeps coming up. Real time power trading can often be secured straight out of college/uni. It's a decent job, but definiltey not in the same category as other physical trading type jobs. ie: trading term power, gas, oil, etc. It's probably closer to a 'scheduling' job and as you're just balancing the market constantly (not a great analogy, but hopefully gets the point across).

Now what do people thing about phyiscal trading (other than real time power) vs ER in same industry. Does one offer a better trade off than another, especially if you are intersted in and capable in both and can potentially / reasonably have a shot at either?

thats a toss up honestly since both are the same in terms of first 5 years... both can make or break you at the early stages and $$ could be roughly the same. I say longer term the safe bet is ER and getting a CFA.. if you can handle the risk.... the phy trading may be more your style

9/26/14

Only reason I ask is because I'm in commodities research, with some corp dev background. In another year or so I can either stay in current role and go down very specialized path of being the commodities research guy or I can put my name in to slowly go down the trading path (obviously a multi step process) or I can leverage experience into ER (have some contacts on the ER side and my experience in commodities (oil) should help). Good problem to have and I'm probably focusing on it a bit earlier than what's required, but it's nice to determine a rough path and plan / adjust focus accordingly.

Useful input, thanks!

9/26/14

Disagree with your tone and thought process. Figure out if you want to be a trader or do research, as monty explains trading has is sure not the safe path.

But if anyone comes up to me and says "real-time" is not real trading, I will kick them and notice right away it's clear said person has no idea about how risk management works or any idea how to build such skills. If you think any role that involves risk/var management and P&L is simply balancing and not as "prestige" as other things. Maybe you should stick to research.

You are not going to make $100mm for a book trading "real-time" but you will learn risk management is pretty damn key to any career down the line in phyiscal trading. Reasearch guys take no risk and are unbiased most of the time and as much as myself or other traders want to beat them up when their research leads to the wrong trade, their job is never to assess P&L and risk that is the trader's.

9/26/14

Can you guys correct me if I'm wrong, real time power trading is physical, and trading day-ahead is financial?

How hard is the transition from real time to day-ahead, and how does it usually take to get there?

9/26/14

I don't think you should view day ahead power markets as financial since when you buy or sell power on the day ahead markets, you have to meet your obligations; therefore be able to consume/deliver the power on that deal. If you don't deliver, big dildo up your butt financially.

Some people might disagree but I see RT power more of an optimisation job and DA as a more senior and speculative job.

This is what I believe to be the typical career path. This is obviously not the only route and the job description will differ from shop to shop (some RT traders schedule as well):

1) Real time power scheduler (aka the b!tch): Basically assist RT traders and works like a dog. You will get to understand the systems, time management, attention to detail and managing peaks in stress. What sucks: You can only have a negative or neutral impact on the P/L. What's nice: Loads of days off as you work days and nights, therefore allows you to travel quite a bit.

2) Day ahead power scheduler (the senior b!tch): The same as #1, but usually with a year or two of experience. Deals with larger volumes and long term contracts.

3) Real time trader (at last some room for P/L!): After slaving away a few years as a scheduler (3 years+), if you are good, likeable and lucky, you might be promoted to a real time trader gig. In this instance, you will have the opportunity to make a positive and negative impact on the P/L. As a RT trader, you will most likely optimise the unexpected spikes and falls on production (plants can and will go down!), and therefore constantly balance your portfolio so that, in the best case scenario, you will match consumption and production. This job makes you learn how to balance risk management with greed.

4) Day ahead power trader (the 200k+bonus 7h to 16h job): Mostly a senior position with several years of experience (at least that's what I see in big shops). Analyse trends in power demand via macro trends, FX changes, temperature (heating degree days and such), weather (wind and solar forecasts), planned plant outages and potential strikes. Seems like there is a bit more room for speculation to my eyes.

9/26/14

Does anyone have any firsthand insight on the hours of phys com trading?

9/26/14
9/26/14

yes I read it, and no I'm not coming from Morgan Stanley.

9/26/14

if there is no one above you, it's a lot easier to get on top

just saying

9/26/14

It really depends on what product/desk you work on. Also if you want to mainly trade prop/spec one day or focus on flow/hedging.

Most of the banks are pushing out of physical prop side. As MS was mentioned, they have major power/energy desks and are starting to ramp down in the last 6 months. Gorman wants a more stable less VAR MS and dodd-frank makes it hard to trade physical assets from a prop/spec view.

9/26/14

Pretty standard to start in scheduling or risk before moving into power or nat gas trading role from what i have seen, not sure about fuels/crude. I am in physical power trading now but my plan is similar to yours, can sometimes be the quickest way to move through the phases, especially in smaller shops with low turnover. But I'm not in Houston, may be different out there.

9/26/14

Sorry to revive an old topic, same boat here.

Started a few mo's ago as a Natural Gas Scheduler, will sit here for 2-3 years and then try to get into a trading position here or at another place. Over where I'm at currently, it's fucking awesome. Great w/l balance, the pay though is on the lower end of the industry, but I'm curious about pay in general.

How much does the average Nat. Gas Trader get paid; salary base, commission, bonus?

I'm assuming something like 90-120k base for a Trader, comission is 5% of PnL book, bonus is company standard at 10-20% of salary?

The more senior you add another 10% on top of that 120k as your progress up.

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