Auditing Electrical Engineering Classes for Power Trading
Typical finance major here, I’ve noticed a lot of the power traders I know have EE backgrounds. I’ve been thinking about auditing some EE classes to hopefully learn more about the basics of transmission, generation, etc as I want to be a power trader. How much would this actually help me?
The descriptions for the two courses I want to audit are as follows: 1. General considerations in transmission and distribution of electrical energy as related to power systems; calculation of electric transmission line constants; general theory of symmetrical components and application to analysis of power systems during fault conditions. 2. Load flow studies; power system transient stability studies; economic system loading and automatic load flow control.
Auditing these Electrical Engineering (EE) classes could be a solid move if you're aiming to become a power trader. Based on the most helpful WSO content, understanding the technical aspects of power systems can give you an edge in the field, especially since many power traders come from technical backgrounds like EE. Here's how these courses could help:
Course 1 (Transmission and Distribution Basics): This will provide you with foundational knowledge about how electricity moves through the grid, which is crucial for understanding market dynamics, grid constraints, and pricing. The focus on symmetrical components and fault analysis could also help you grasp how system failures or disruptions impact trading opportunities.
Course 2 (Load Flow and Stability Studies): This course dives deeper into operational aspects of power systems, like load flow and economic system loading. These are directly relevant to power trading, as they influence supply-demand dynamics and price forecasting. The transient stability studies and automatic load flow control topics could also help you understand how real-time adjustments are made in the grid, which is critical for trading decisions.
While these courses won't make you an engineer, they will help you speak the same language as the technical teams and give you a better understanding of the factors that drive power markets. This knowledge can set you apart from other finance majors and make you more effective in analyzing market conditions and trading strategies.
Sources: Q&A: Director of Energy Trading, Q&A: Director of Energy Trading, Physical Energy Trading And Logistics, Power trading - forecasting, Physical Energy Trading And Logistics
I worked as an intraday power trader before. I dont have EE background (I was a Civil Engineering student) and no technical power grid knowledge needed for the job. In fact some of the best EU power traders I know started trading as apprentices after their high school.
There’s some simple knowledge on electrical grid that’s useful (ie UK power grid frequency must run at 50Hz - if it’s above, then there’s excess electricity and vice versa), but thats about it.
Trading intraday power is more about understanding supply and demand dynamics like what are the factors (power supply sources, wind speed, low cloud, temperature, pressure, transmission link availability, consumption, etc) that would affect these. Also, being fast in reacting to new information and knowing what to do are more important. For example, when there’s a power plant/transmission link outage, how do you think it will affect the prices in a specific region/other regions? Should you go long/short? Will other traders also try to chase the same trend? This comes with practice as well really.
I would say it’s more helpful to go through the TSO websites (ERCOT, MISO, etc if you’re in the US, or NESO in the UK, or RTE/Energinet/etc in EU) and find out more about their pricing dynamics, imbalance regulations, power supply sources, etc. They do have comprehensive and practical resources to learn about the power industry. If you’re interested more in the curve side of things, maybe find out more about the futures contracts, FTRs, RFRs, etc.
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