Been slow on the desk lately. Figured I’d do an Q&A about breaking into the industry.
Currently an FI Trader - 2 YOE
Previously a Commods Trader- 5YOE
Networked into both roles. Very rough Gpa (whatever your thinking… lower). NON- Target. No family connections.
Go!
A few questions since I’m very interested in commodities:
- How were you able to break into commodities?
- Were you trading phys or paper?
- Why the move from commodities to FI?
A lot to unpack here but I’ll do my best.
1- Breaking into the industry is extremely difficult without a connection or the right degree(understatement of the year). Especially considering the # of seats is limited. That being said your going to need to work your ass off to get there. Network your ass off. Send out 20-30 friend requests per day on linked in. You’ll probably get a 10% hit rate in terms of what will convert into informational calls. From there you want to close them on why your a good fit for the industry and causally ask if they know anyone hiring. Do this for 1.5 years and I guarantee you’ll find SOMETHING.
2- Physical for first year. Paper for the remainder.
3- Culture & compensation. My old shop was a very rough environment. Think guys who have been on the same floor since the 90s. Very crude, very hierarchical, and very political. That being said I knew I had a return offer if this didn’t work out so figured I’d take the leap. Additionally, I was looking to expand my knowledge base and the compensation structure had more upside w/ better base.
How did you become a trader with low gpa and which one do you think is easier to break in sell side or buyside?
Buy side by a mile.
Networking. Getting licenses early. And researching the industry.
All these guys want is someone that can do the job. You have to do the things that create certainty to the potential employer that you can get the job done. That being said, I came correct with the right attitude that I was willing to learn and extremely motivate. I was so motivated I offered people to work for free.
Which products within fixed income do you find most interesting and why?
How did you make the switch from commodities to FI? I would have thought there is essentially no crossover between the two on product knowledge and skill set to a lesser extent
As I mentioned above. Networking. That will get you very far both in business and in life. My value add was that I had a PHD (Poor, Hungry, and Driven) in addition to the fact that I had a track record of above average performance. From there it was a cultural fit and finding someone who wanted to bet on me.
+1 for the BS memo ref
What ur morning routine aside from emails/ibs? Daybreak? Zerohedge?
I’m aware that many Traders are bound by rituals and routines but I don’t have one particular routine. Really depends on the issuance & the economic data coming available that day.
Entering a commods focused PE firm (like Paine Schwartz) next year and looking at eventually getting into trading. Curious to hear if that background might be desirable / make sense? Appreciate the time again and assuming you’re buyside S&T now?
Yes. Buy side S&T.
In terms of making that switch I’m sure it’s doable. While I would caution that you are likely going to be fighting an uphill battle I think that the majority of skills can be learned (as with anything). That being said, I’m not sure how marketable you would be to anything other than an entry level role.
But to flip the question back on you, I would ask why are you interested in S&T vs. PE? Most of the guys I work with wish they were in PE. But I guess the grass is always greener maybe…
Simply out of optionality as I’m really interested in experiencing public markets at some point, but not sure I want to begin my career there. From that perspective, it’s helpful to know the PE background would help as I was worried the fundamental purchase of things like distributors / farmland might not play into the trading aspect in the markets (like you alluded to). Most of the people you’ve worked with over your career have looked at PE?
EDIT: And out of curiosity, would something like commods PE setup better for a career in buy side trading or S&T at a BB?
What commod asset did you trade? Whats your thought between gas/power vs macro trading?
Metals.
Want to make sure I’m answering the question properly. I’m what context do you want my opinion? Are we taking job prospects/ career growth? Or are we talking market opportunity/ PNL generation?
Thanks for replying! Would love your thoughts on both - prospect and also market opportunity!
Before asking further questions, just wanted to know what kind of products do you deal with and whether you are prop trader or market-maker?
Prop Trader. We trade Agency MBS
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