Commodity trading - can I be successful if I don't have killer instinct?
Commodities, about 5 years into my career. I have only worked at small trade/marketing shops, so my perception of things is influenced by that.
I have been fairly successful so far; am seen as an expert ops guy, and generally very knowledgeable about the business, and so on.
Without divulging too much, the type of trading my group does is primarily relationship trading. It's often getting between a producer and end user. Taking on timing risk, hitting delivery windows, etc. It's definitely not rocket science. It's a business where we are competing against major globals, but obviously they are on a larger scale.
I think the whole skillset would be different working at a producer, or company that's more asset-driven. And maybe that's where I belong. But a trade shop generally pays more.
So, at my shop, I am now having "Junior Trader" responsibilities, and have been given a leash to go out and try to grow the book, and so on. Building out a commercial book is really the only way I can increase my earning ceiling from here on out.
I feel like I'm underachieving...and it comes down to my basic nature.
I'm super knowledgeable, good at sorting problems, dependable, can handle stress, etc.
What I am NOT, is the person who is great at going to a trade show, getting liquored up with some producer rep, and getting a huge deal done with them. And these are generally the people that get paid the most...those that can bring in huge deals.
Same thing...as crazy as it sounds, I'm not even that motivated by generating PnL, and then getting a bonus for that. Of course it's awesome to get paid, but that's not my primary incentive. And I know guys that would kill their grandma for a bigger bonus. And those guys are usually the best traders.
I'm not really sure how to develop this skill. I know I'm good with people, and driven. But it's just not natural to me to be the person that cold calls 50 people a day.
Also, as a young unknown person, I think it gets received a bit differently than somebody who's been kicking around the industry 20 years.
I know that's a long post...but basically, is it possible for me to keep on growing, without having "it" ?
Logan said You do not have a killer mindset to Kendall and Kendall went apeshit. Do the math
You sound like you would be a good fit for structuring roles.
I think you're pigeon holing yourself here
There are a number of roles in commodities that require a range of skillsets - you're only comparing yourself against one, which is a "physical" trader
These guys are primarily relationship, sales-orientated guys: as you said, they'll quickly become someone's best mate, book a huge deal, and reap the reward from that
But, as you also said, it's not a hugely technical role
You've also go derivatives traders
Now, this role will vary wildly from shop to shop: some places will have derivatives traders who will mainly be concerned with hedging the aforementioned physical business (less sexy), while other places with have derivatives traders in a speculative trading capacity (i.e. prop - much more sexy)
These guys are less relationship focused, and will be much more analytical
The difficulty here is - as you said - you're not overly incentivised by P&L
While physical guys certainly are (within the broader confines of a team book), derivatives traders hugely are: they will have a P&L against their name and will see that change within the space of a day, and they will be working day-in, day-out to make sure, come year-end, that number is as large as possible
You also have operators and other less commercial roles, which can also be very rewarding and also well compensated
An operator will deal with the underlying logistics of the physical trade, as well as make sure the cargo (or whatever it may be) is properly hedged - this means communicating with the physical trader, the derivatives trader, the counterparty's operators, etc. to make sure the trade itself is executed in the smoothest manner possible
While still a job requiring some degree of relationship management (let's be honest, nearly every role in nearly every job requires this), it won't be to the same degree of schmoozing as the physical traders
At the end of the day, you have to ask yourself: i) What you think you'd be good at (i.e. can do to best reward yourself monetarily); ii) What you'd most enjoy (i.e. can consistently do for the longest period of time without burnout); and iii) Whether you care about "titles" (like a big, sexy "trader") or being respected within your own universe (such an outstanding and invaluable operator, who will one day eventually run operations across all business lines)
Your answer to #3 will affect your answer to #2 - if you love a job, but feel it lacks prestige (even if only in your own mind), it will detract from your overall enjoyment
Not sure the commodity, but you sound like you're more describing an originator than a trader? Originator cold calls or goes out to these conferences/events and wines/dines/schmoozes for deals to bring in. The traders job is then to manage the risk within set VaR parameters and generate extrinsic value on top of the intrinsic the originator brought in. Not saying I don't like a good excuse to get off the desk but push comes to shove I can do my job without ever meeting another trader/broker in person if I felt like it. This is in physical/financial gas/power little different in crude/metals so again dependent on your commodity.
Can you become a successful originator without drinking for religious reasons?
You need to be a bit more specific as to what commodities group you're in (i.e metals - no need to say you trade moly haha) to get some more alternatives. If you're in metals, "traffic" roles (basically ops) are great based on your post, especially if you aren't good with "schmoozing"
Dicta et quia nihil nihil ut exercitationem. Qui odio ducimus exercitationem dicta. Aut voluptatibus dolores et autem quo. Soluta consectetur earum fugit molestiae voluptas omnis doloremque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...