Skillsets Gained as an Energy Trader/Data Analyst?

Hi,

I'm a graduating senior in engineering and recently was offered a role as an Investment Analyst at a small, leading power trading firm (FTRs) with a starting comp of $125k. I'm trying to determine whether this is the correct career move for me. I'm most interested in the skillset I'd be developing in such a role. My alternative is pursuing a Master's degree at a top engineering program. I'm wondering how transferrable the hard skills I would gain in power trading role might be to other forms of trading or more generally. I would really appreciate any insight. I could also provide more information over a private message if it would be helpful in providing guidance. I would truly appreciate any advice.


Thank you!

 

Ahoy there!

Diving into the world of energy trading, especially at a firm focused on Financial Transmission Rights (FTRs), is like embarking on a thrilling expedition through the high seas of the financial markets, with a compass pointing towards both risk and reward. As an Investment Analyst in this niche, you're not just charting unknown territories, but you're also gearing up with a treasure trove of skills that are as valuable as they are versatile. Let's break down the map to see what jewels you might uncover:

  1. Analytical Prowess: At the heart of energy trading, especially in a role that intersects with data analysis, you'll sharpen your ability to sift through vast oceans of data, identifying patterns, trends, and anomalies. This skill is akin to navigating through the stars, where your ability to analyze market data, price trends, and regulatory impacts becomes your North Star in making informed trading decisions.

  2. Risk Management: The volatile seas of energy trading require a keen sense of risk management. You'll learn to evaluate and hedge risks associated with market fluctuations, contract negotiations, and regulatory changes. This skill is your lifeboat, ensuring you can weather storms and navigate through turbulent markets.

  3. Technical Tools: Your engineering background will be a valuable asset as you get hands-on with advanced trading platforms, simulation models, and forecasting tools. These technical skills are your ship and sails, allowing you to traverse the complex waters of energy markets with precision and efficiency.

  4. Market Insight: Immersing yourself in the energy sector, you'll gain deep insights into how economic, geopolitical, and environmental factors influence energy markets. This knowledge is your compass, guiding your trading strategies and investment decisions.

  5. Regulatory Acumen: Understanding the regulatory landscape is crucial in energy trading. You'll become adept at navigating the legal and compliance aspects that impact trading activities. This skill is your map, helping you avoid potential pitfalls and ensuring your trading practices are above board.

  6. Communication and Negotiation: As you engage with stakeholders, negotiate contracts, and collaborate with teams, you'll hone your communication and negotiation skills. These are your crew, essential for steering your ship towards successful ventures.

Transferring these skills to other trading roles or sectors is like setting sail for new horizons. The analytical, risk management, and technical skills you develop are highly transferable, offering you the flexibility to explore opportunities in various financial markets, commodities trading, or even tech-driven roles that value data analysis and market insight.

Choosing between this role and pursuing a Master's degree in engineering is akin to choosing between setting sail now or charting a course for further academic exploration. Both paths offer valuable experiences and skill development. It ultimately depends on where you see your career compass pointing: towards immediate immersion in the financial markets or further academic enrichment with a focus on engineering.

Remember, the seas of opportunity are vast, and the skills you acquire as an energy trader/data analyst can be your guiding stars, leading you to diverse and rewarding destinations in your career journey.

Fair winds and following seas on your decision-making voyage!

Sources: Advice On a Career, Energy Trading: Career Path, Lifestyle, Wages, etc, Physical Trading - Energy Commodity Preferences, Refined fuels trading experience but lackluster Engineering GPA, Consensus regarding energy markets

I'm an AI bot trained on the most helpful WSO content across 17+ years.
 
Controversial

Nowadays power trading is very quant oriented. So much depends on weather especially in europe...each country has different fuel mix which means a region with lot of renewables energy experience price volatility. weekly and monthly base load prices are completely different from intra day and day ahead prices.....Understand one thing....a trader trades a specific product in his life or a different variant of the product.....power trading could be financial or physical and if its physical then it could be intraday vs short term vs short to long term with some scope of speculation.....if you are a completely speculative trader then you can do whatever you want depending on what you know.....oil trader can trade distillates or some other fuel.....some natural gas traders move into LNG trading.....power to gas or gas to power is possible in some cases.....but oil trader dont trade natural gas because once a trader develops his edge then he likes to make as much money as possible instead of risking and moving to trade something else....

If you are a ML engineer in power trading then I assume that you can go on to become a ML engineer on a macro desk.....i think ML skills are transferrable early in the career because they want you to be an expert in analysis and statistical research....

 
Most Helpful

Says the guy asking for people to tell him how to trade natural gas in a separate post thinking he would get the answer... You are probably in almost the exact same general position in terms of career as the poster and you are trying to give him advice like you know the inner workings of the industry, seriously? 

It was me and I'm not some idiot still in college reading finance forums thinking its going to help me. I occassionally sign on here to see if there are any questions I can answer because I want to try to help when I can. In this case, I can provide some real, experience driven information. I labeled it inaccurate because I believe several things you said are inaccurate. Mostly this: "a trader trades a specific product in his life or a different variant of the product." This is an incorrect and dangerous statement of advice to someone just starting out. It's also a good example of selection bias. It's true for the most successful traders, because as you said, once a trader finds his edge they generally stick with it, but I could give many examples of profitable traders switching products (ags to power, power to equities, power to crypto) etc. Sometimes its forced by a company, sometimes its simply a matter of interest. Those who switch aren't the biggest names or players so you think it applies to everyone but it really doesn't. Many of the best traders may not work for the biggest names as well. The payout ratios of some smaller funds (especially in power) can be extremely lucrative and if you are someone who really doesn't care or want name recognition, you may be better off at a no name fund making bank. Other people in the industry may disagree with me and that's fine, they can throw monkey shit and label this as inaccurate. I won't care and you definitely won't see me creating replies insulting people that disagree with my assessment. After all, I'm not some college kid on a finance forum looking for advice on how to trade and thinking that's what's going to help me.

Separate note: The title for the job of "investment analyst" is likely misleading from what you probably expect (or at least what I would have expected when graduating). You are not going to be doing a DCF of some asset, you will be predicting where congestion occurs in the market, what amount you should pay for it and what the risk/reward in terms of actual prices. Very different type of analysis compared to a traditional investment analyst looking at equities.

 

I am certain that my statement is true that traders dont trade different products over course of their career except very few.....it was wrong of you to invalidate my statement....its actually dangerous to advice that guy that he can comfortably go on to trade different products....

I apologized in other post when I was wrong. I did it immediately....but you didnt see that.....

Still don't understand how me not having trading experience makes me incapable of advising someone about starting out their career? There is shitt load of information out there nowadays.....personally I have learnt about this industry from professors and professionals who have been in this industry for decades. And I am not talking about having a 30 min coffee chat....I worked at one of the good firms in London past 1 year and my boss has been trading natural gas for 3 decades. I used to discuss with power traders and oil traders on the trading floor on daily basis.....and I have peers who work in amazing firms all across the world.....

 

As someone just starting out, you will have the option of going back and getting that masters later so first and foremost, don't think of this decision as something that definitively decides your career path.

Trading skills apply to almost any market. A power trader could end up traing equities later in life. You would need to learn different fundamentals, but you would have learned the psychology and how markets react which are skills that apply across any product.

The biggest question is whether you want to be a "real" engineer or do you like math and problem solving. I was an undergrad engineer (chemical) but I only succeeding because I could problem solve and understand the complex math that applies in power analysis. I didn't give two shits about figuring how many levels were need in a distillation column to maximize efficiency or design the optimum reactor to mix chemicals. If you enjoy the building of systems, designing components, etc of engineering, I'd recommend sticking to engineering instead of going into a markets related job (power trading or any other product). I'm also going to assume that as part of being an FTR analyst you will probably be doing a decent amount of programming. Not sure if that's a positive or negative for you but I think it's something you should expect.

If you have any other questions feel free to DM me. I've been in your spot but for me it was a no brainer to not take an engineering role when I graduated.

 

No, that isn't enough. For FTRs, there lots of programs that do power flow simulations so you may not have to get too deep into the math, but if you really want to understand what's going in, it's a combination of linear algebra, matrix math and complex variables. More traditional quantitative trading will need advanced statistics at a minimum. My finance masters didn't even teach the math I would consider necessary for a quantitative trading type of role so I doubt your standard undergrad would have it included. You would probably need at least a minor in math to get to a reasonable level. 

IMO, understanding finance and being able to code but not understanding the math is a good way to end up a "code monkey."

 

This definitely isn’t DC their recruiting ended 4 months ago

 

so i'll go out on a limb here and say that if take a FTR job it could make it difficult to transition to other commodities as well as fx, fi, equities, etc. The reason being FTR are extremely niche even in power. To transition to sparks or gas wouldn't be a stretch at all. The transferrable skills would be data analysis and scenario testing which I think are very useful in other trading roles. However, FTR's generally don't trade (a few trade bilaterally) but are cleared in an auction so the charting, market depth, trader sentiment parts of other trader roles are somewhat non existent in FTR trading. 

All that being said FTR's are huge and extremely profitable. The PnL with capital posted can be very enticing and can lead to a succesful career. Some heads of banks and hedge fund power desk started as FTR traders.

If you take the job at a reputable FTR shop and don't like it, leave and look for other trading jobs. I'm 99.9% sure if you're smart enough to get a job at a DC Energy, you're smart enough to get an interview at GS for a junior equity trader just may take more work a after a year in FTR's.

TLDR; take the FTR job and leave if you dont like it, you will build some transferable skills.

 

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