Physical Houses?

Based on the most helpful WSO content, here's what you need to know:

Recruiting Process for Physical Houses:

1. Networking is Key: Unlike investment banking, physical trading houses often don't have formal HR-driven recruiting pipelines. Networking and cold outreach can go a long way in securing internships or entry-level roles.
2. Internships: Getting your foot in the door is crucial. Even short-term experiences (e.g., 2-week work experiences) can significantly boost your chances of landing a full-time role.
3. Target Firms: For physical trading, focus on firms like Glencore, Trafigura, and Vitol. For agricultural trading, the "ABCD" firms (ADM, Bunge, Cargill, and Louis Dreyfus) are key players.
4. Regional Opportunities: Some firms, like ADM and Cargill, hire grads in specific regions (e.g., UK, Netherlands). A second language and a Master's degree can be advantageous, especially in Europe.

Compensation and Lifestyle:

1. Compensation:
   • Physical Trading Houses: Starting pay at physical houses like Glencore or Trafigura may be lower compared to BBs, but it can increase substantially over time. Bonuses are often tied to your P&L once you manage your own risk.
   • Agricultural Trading Houses: Pay can vary, but it generally lags behind oil and metals trading. However, the cost of living in these roles is often lower due to smaller satellite office locations.
2. Lifestyle:
   • Physical trading is intense and hands-on, involving logistics, relationship management, and problem-solving. It's not for the faint-hearted.
   • Work-life balance at physical houses is often better than at BBs, but this can vary by firm and role.
   • Trafigura, for example, is known for its high-pressure culture, while firms like BP may focus more on diversity and structured environments.

Comparison to Commodities Derivatives at a BB:

• Commodities Derivatives at BBs: These roles are more financial in nature, focusing on trading paper contracts rather than physical goods. The lifestyle can be demanding, with long hours and a fast-paced environment.
• Physical Trading: Involves managing real-world logistics, supply chains, and relationships. It's more operational and requires a different skill set compared to derivatives trading.

If you're interested in physical trading, consider internships in related sectors like logistics, trade finance, or even working with commodity producers/consumers to build relevant experience.

Sources: A few questions on getting started in physical trading, https://www.wallstreetoasis.com/forum/trading/compensation-at-oil-majors-and-physical-houses-for-traffic-desk-and-traders?customgpt=1, Compensation of commodities trading firms compared to supermajor oil and gas companies, Physical Commodity Trading