High schooler interested in physical commodity trading
Hey everyone, rising high school junior here. Over the past year I've gotten interested in physical trading (agnostic to product) and have read The World for Sale in addition to articles and tweets about the space. However, I am sick of just day dreaming all day about my "dream" career (yes I understand my career ambitions may change by the time I get into college) . I have read a couple of WSO threads and the consensus is that target school is not as important as it is for IB (but I will still try to get into the best school I can). I also understand that it isn't a linear career path like in banking where you do 2-3 years of analyst and go to associate. You have to start out in a scheduler/ops/risk role and have patience and then maybe you'll get a shot at a trading seat.
My question is if anyone who is experienced in the space could give me some specific advice (besides do well in school) to get ahead of the stiff competition.
have we reached market peak when a high school junior is interested in physical trading?
Pls explain this take…
What? It's just funny because rarely do you ever see a high schooler interested in commodities, let alone physical trading. Even on this site it's usually limited to high schoolers interested in banking and HFs and maybe S&T.
Redacted
DickFuld have you any insight into this matter?
I try this to "tag", I do not know if it works, I am unacquainted with the intricacies of modern technology.
let me guess, you just watched Blood Diamond.
I honestly thinks it’s because people feel like carbon trading will be the next wave because of the “great energy transition” stuff in the news. People probably figured starting at a traditional commodities house will give them an edge up when it comes to getting their foot into the door.
Lol focus on getting some hoes and making the football team first,m. Good on you for being interested but over specializing at a young age is a bad idea just like in sports
Short Answer: No
Long Answer: You're a junior in high school, you have 6 years before you graduate and enter the job market, you, me and everyone else in this world has no idea what the job market will look like, especially for commodity traders. Live in the moment, its cliché, but life never goes according to plan. I changed what I wanted to do maybe 3-4 times in college while always being a finance major. Obviously this seems like something you care about or else you wouldnt be here, but the best thing would be focus on just maximizing the value of where you are right now, get good grades in school, crush the ACT/SAT, and make memories. 90% of the job you learn being on the job, you cant read it in a book or in the Financial Times or on a tweet, so theres no point in obsessing about being an expert in everything.
why do you want to be a physical commodity trader?
just to let you know, I'm going to answer this question a bit later in more detail so it isn't "because oil go brrrr and Glencore prestigious."
you already answered. Thanks.
No I didn't answer your question. If I wanted to go the prestigious route, Glencore isn't as widely known as places like GS or Google unless they have bribery scandals publicized (which just makes Glencore look like another standard corrupt mining company). No one my family/friend circle knows about the big trading houses so it would render trying to brag about how I work a "prestigious" and "secretive" trading firm useless.
I got interested in commodities because there's many factors that can affect the prices and as a physical trader, there are multiple factors that can affect a trade. For example, EIA numbers coming out and showing lower supply than expected can be one of those factors (rudimentary example). Or let's say satellite data showing oil storage farms stacking up on oil across the world. However, that's not why I want to go into physical specifically. Making sure every piece of the trade is in sync such as getting financing, hedging, tankers en route, etc is obviously very challenging and isn't always exciting. But those types of challenges is what interests me and goes beyond sitting in front of a screen hitting buy/sell on WTI futures.
Mainly, dealing with all the nuisances in a trade (including taking into consideration the macro environment) while also needing relationship skills to talk with shipowners and maybe even powerful local politicians interests me as a career. Does that mean I'm not considering other career choices in commodities? No. It doesn't even mean I'm not considering other career options outside of commodities. But this is just my dream career as of now.
This may be all wrong and naive because, as someone mentioned, a lot of the skills you learn on the job. I also want to be clear that I realize I'm not gonna just graduate and join an oil major or a trading house. It will not be a linear path and if I'm lucky I'll get a chance.
A big part of trading is getting others to like you. People skills will take you much further than anything else. I have a buddy that trades oil and he really isn't that bright. Scraped by with a 2.5 econ degree from a big state school (couldn't get into the business school), took him 5 years to graduate, spent most of his weekdays at the bar, etc. Yet, he is 28 years old and manages a pretty good sized crude book because people absolutely love him.
So, with that, I guess you need to learn how to booze and crack jokes. It will take you further than learning about real options, that is for sure.
Physical trading at a lot of places is a far cry from anything that gets the trading title at a bank, hedge fund, market maker, etc.
There are tons of guys in ag trading with business degrees from no name state schools in the Midwest. I personally know and have worked with plenty of them as coworkers and counter parties.
The story I told about my buddy is true.
There are a couple people I know in Houston that have similar backgrounds and trade for big shops.
I know another guy that isn’t even 30 that ended up a trade shop handling a large lat am book and he just has a general business degree from a no name state school as well. He knows ops better than anyone and is fluent in Spanish, though.
I guess all of those people don’t qualify as “anyone” to you but that’s your call I guess.
POV: you just finished reading king of oil
replace King of Oil with The World for Sale lol
not to mention while his lifestyle during the golden age for physical trading sounds great, lots of personal crap was happening such as his daughter getting leukemia. Also can't imagine the stress of being a US fugitive even if you're in Switzerland. Not a lifestyle I would dream about.
Honestly man it’s not exciting, don’t sit around day dreaming about the future. It’s a job and physical trading is definitely not glamorous. I’m guessing you spend a lot of time online trying to optimize for the future, but just relax and enjoy being young
Try losing your virginity before graduating high school first dweeb
Truly world for sale is a fun read and these last 2-3 years have revived physical a lot. But the data driven and quant trends are not slowing down. So you should really solve how quant you are and if that is what you enjoy. If you really want to go relationship route then you should aim to goto a top school cause you may need to narrow your search early on.
The 2.5gpa stories are great, but with resumes that come in these days in 5 years time the dude with 2.5gpa aint gonna hire anyone with 2.5gpa anymore.
Hey, finally found someone who is reading/has read world for sale!
Are firms looking to hire traders with great relationship skills (as they have in the past) and technical skills, particularly data science? These big trading firms have lots of data coming in so I'm sure they are already using data science to aid traders.
Exactly the dream is still math/econ with strong relationship skills. Can handle the pyton/sql/etc but also know what to do in social settings.
A major part of jr commodity trader job is to make small-talk to any client in the morning. How is weather, your dog, wife etc…
You are in high school. So tbh there is not really much you can do in terms of getting ahead. You can learn about commodities in general by reading books on the topic but they will be of no help to you because you only learn about the market when you start working tbh. As mentioned by other people, you might feel you want to go into commodities but your career plan may change in the future. The main thing that you can do right now is to focus on your studies, getting good grades and getting into a top school.
One thing though you can try is to land internships in operations for the commodity you want to be in be it metals, agri or energy. Having operations experience will put you miles ahead of people without such experience since you can hit the ground running. Also learn how to network since that is the biggest strength in physical trading. Learn how to negotiate since negotiating contracts is going to be what you're going to be doing. If you want to go into Shipping then learn about Maritime economics. Another thing is start trading any market (crypto, stocks, fx) with a small sum of money ($1000). The goal is not to make money but participate in the market (if you do this pls do not put in your CV that you trade in your free time because then you might be chewed out in an interview) and understand yourself and your behavior (fear/greed). Also try not to lsoe money.
Also, just want to clear something,. As a physical trader you will not be handling the entire value chain. The logistics part will be handled by the freight desk. The talking to politicians will be managed by the managers of the oil majors. Also in terms of futures, its good to have knowledge of the derivates as well since a lot of physical traders hedge using derivatives themselves. In general, learn about derivatives once you get to a Top school.
But at the end of the day, now is your age to have fun. So dont forget enjoy your high school and your undergrad.
thanks for taking the time to respond.
Similiar to your point about trading a market to introspect emotions such as fear/greed, do you recommend me to write stock pitches on coal, natural gas, shipping, etc companies? It's specialized but I think that would be a good bridge between learning about a space but actually being able to apply that knowledge rather than having it all stored in my head.
That's a good idea. Try to figure out what drives value at different types of natural resource companies.
Can't think of a time in recent memory where logistics, geopolitics and macro were so intertwined. Energy, ags, metals... everything seems related right now.
Yes, that will allow you to understand the sector better. But the reason i'm asking you to be active in a market is because even with small sums of money you will take stupid risks. You will lose money and it will force you to introspect on what mistakes you made. If not $1000 start with $250. Start with a sum that will sting if you lose it.
how would I attain the ops internships in college?
Tbh it is usually difficult but reach out to anyone and everyone in the commodity space you are interested in. Most places tend to not have ops internship because a fuck up can cost a lot of money.
Sorry to revive an old thread but I'm starting on an ags desk very soon and was wondering how do I build negotiation skills?
Don't worry about it now. Just do what job you are given to the best of your ability. If you're good you'll start getting some client facing responsibilities. At first it will be limited. But try to make the most out of it. For example you might have a contract with pre-determined freight rates. You see market is in your favour. you can try and see if you can use that to get a slight discount on the rate or on demurrage. but that is not easy. you will need to manage that relationship. Now dont do it on your first day. Only do stuff like this once you're comfortable and you think you can add a value.
St some point as you continue your journey to a seat you will get opportunities to negotiate. Likely you'll be fleeced the first time you negotiate. But you learn from it. You understand the different players in the market and know who you can push and who you cant push. I dont think there is any other way to learn negotiations tbh. Its just market experience. Some guys are just good at it some people need to learn.
Sell crack to kids and put it on your resume
Starting my own shop: Contango Crack Co.
Do you have any good contacts across the border or better yet in the United States? Also looking to build out a freight desk so hit me up if you know any stealthy transporters.
Contact your nearest fiji or acacia house, they are definitely willing to buy
You remind of me back in college. I don't think you grasp the difficulty of getting into a trader seat from a risk/ops seat even if you admit it in your post. It's honestly a stupid career path unless you're an exceptional person who has lots of luck. This is an unpopular opinion in this thread but don't go down this path unless you're willing to sacrifice the optionality you have with a banking path. Only exit opp in commodities is other shops (the good exit opps are only when you're a senior).
Also just read that EU is strongly encouraging regulation on commodity trading firms + automation that will affect everyone besides seniors who have already developed strong relationships over the years and have been lucky with good product and right place and right time. So I don't see any upside in this career path because it's not like you can't make the same money in IB/PE/S&T. Another commenter pointed out how it isn't glamorous and isn't like the Marc Rich days when traders would have to manage freight processes and develop relationships with politicians.
My recommendation is don't go down this path. There's so many other "interesting" roles in finance.
for the record, I'm not on the nat gas desk and currently a first year analyst in M&A. Not like the guy whose comment glitched and posted three times.
I do not think Automation is a threat in the physical world. Now I do not mean automation is not happening but a program cannot sell physical cargo. Yes a pure paper desk might be able to automate spec trades but I do not see a program hedging your flat price risk tbh. If that was teh case multiple commodity firms would not be running paper desks for hedging.
In terms of seats, yes it is limited and you need a bit of luck to get into one. Some people move into a seat after 2 years while others move after 10 years. Completely agree with exit ops. Once you are in the commodity business likely your entire career will be in that commodity. However, within that industry there can be multiple roles to branch out into. May be not a trader but then you can be a blender or originator or even Sales or even internal investment/M&A.
I agree with your opinion that optionality is limited vs banking but depends on what the kid likes. Does he like going through balance sheets and stuff or does he like the markets more. If he enjoys interacting with the market, with forming views and taking positions (physical or paper) then he might not like being in banking. this is ultimately something that he has to figure out.
whoever threw MS for "low quality", please elaborate.
I've heard that MS doesn't really promote anyone from scheduling roles to trading. I can't confirm this personally but heard it a few times over the years.
OP, keep in mind most of the commodity traders that replied to you are older and have selectivity bias. Might as well try for quant which is as selective but you can at least get lucrative roles in Silicon Valley if it fails unlike commodities where you'll be a scheduler in Houston making 150k a year max.
gas schedulers are 150 bid in Houston right now. lol "max". The market is hot, a a result of a structural decline in developing the younger generation after the financial crisis.
This has to be one of the worse takes I've seen on this forum. I'm under 30 and started by career out scheduling and it was right up there with my highest paying offers out of school. Worked 8-4 with weekend rotation every 5 weeks rarely longer besides the odd issue/firedrill, and I actually "worked" everyday never bored. In <5 years made the jump to trading and am clearing well over $150k/yr by order of 6 figures and come into the office maybe 2-3 times a week now.
Physical trading is very much hit or miss. It’s a niche industry and seats are very limited, but I think you underestimate how valuable the skills you learn in commodities are. Have seen people lateraled to other trading type roles (not necessarily commodities)
Why all shitting on physical trading? Please explain… I’m 1st year IBD at a bank with a very strong Nat resources team. Looking at going into industry and physical trading seems the best path.
Why all shitting on physical trading? Please explain… I’m 1st year IBD at a bank with a very strong Nat resources team. Looking at going into industry and physical trading seems the best path.
Why all shitting on physical trading? Please explain… I’m 1st year IBD at a bank with a very strong Nat resources team. Looking at going into industry and physical trading seems the best path.
best time to join was during mid-late 2010s. While joining during a crazy time like this may seem good for learning, long-term you may get fired because firms will remove excess staff. Better to join when posts like "commodity trading is dead" come out and then stay for 5-10 years so you get the advantage of learning during super times as well as learning while prices are down.
From an oil, gas, and electricity perspective, the best time to join was early 2000s, not the 2010s. Ask older people about "day of the trader" conferences. Wild times and pay reached insane levels by the time the financial crisis hit.
From what I have seen, too many people that joined in the last 8 years or so got used to low volatility and have really struggled the last couple years
I semi agree to this.. i started in 2007.... really today just feel like last man standing
Everyone ignoring my comment(s) (again not the nat gas guy) is proof that physical trading is one of the worst risk/reward propositions in finance career pathways.
When someone thinks the WLB of banking is better than physical trading. Hard for anyone to bother to add anything.
Bottomline they are two totally different jobs/interests and comparing the two is stupid.
I said "worst risk/reward propositions" not WLB. The risk is you get pigeonholed into a product and only way to get out is to move to another firm and do the same role in hopes of becoming a trader which is very likely. The reward is maybe you touch 7 figures 1-2 years out of your whole career but that's only if you're global head. You can make more than much more easily as an MD in IB without having to be the jack of all trades.
Don’t be such a hardo.
I think I got the message from the other commenters lol.
Okay Ray Dalio
Didn't say "High schooler interested in punching my boss and starting my own hedge fund" lol.
Not a high schooler, but interested in a career transition from non-finance to commodities trading. Recently came upon an opportunity and just wondering if there is any chance to transition successfully when I'm a decade behind other traders. Thanks!
Your competition for seats is not the traders with 10 years of exp but rather the guys in scheduling and all.
This was top
One of cargills heads posted what he looks for on linkedin. Humility was #1 and no sense of entitlement. Interesting post, not shock.
Could you repost it here pls
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