VP in PE considering wild swing to commodity trading - where to start?
Currently reading natural gas trading by fletcher sturm to get an idea of how these markets work. Seems like the tailwinds are favoring gas/power traders now but not sure how the progression to a seat actually works or what the compensation looks like. Most likely the replies to this will be along the lines of "why the hell are you going to restart now", dealmaking isn't for me I fear despite the title I am incredibly bored and disillusioned. Any recommendations on where to start educating myself or getting some kind of exposure to what the job is like. I would assume I'd have to start first in logistics and go through some sort of risk management phase prior to a seat but largely uneducated on this career progression.
Way way more junior than you age-wise but made a similar move having been on finance route before pivoting to commodities. For most, best bet are the supermajor TDPs and a couple of trade house programs (Traf now explicitly has a structured rotation and assessment like BP unlike before). Out of these, only Shell would be open to experienced people like yourself and it’s very hard to get in as it mainly takes internal hires. Best best is to get an ops / scheduling role in nat gas or oil or to get a real time trader position at a utility or merchant. Keep in mind all of these will surely be at a steep discount to your VP position - entry level pay. Happy to connect over PM.
Similar position. Sick of PE and have traded commodities in PA for 6 years
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In a very similar position myself, STEM degree>IB>PE, now Senior Associate. Energy trading career path only really came on my radar recently. It sounds much more interesting than the traditional PE route and looks to be benefitting from some great tailwinds in recent times. Slightly worried about how AI will reduce number of seats. Not to sure on next steps / would be keen to connect and hear your thoughts/how you're thinking about it.
Comment above pretty much spells it out imo. There are no shortcuts
Wouldnt take a second look ag you. No knowledge of iso markets. No cap markets desk experience. No s&t and a bank. Too much training that the company doesn't have (is why rotational programs exist). Overall a huge red flag.
shouldn't you be telling us how to start? ur the one moving
valuable thanks
on a similar note, how would one go from IB/PE to macro trading? I wouldn’t mind trading stocks/bonds but also have an interest in general macro products (commodities, crypto, not so much FX unless event driven). Are there roles that have open mandates where u can basically trade whatever u/the PM wants?
Lateral in a bank. I'm assuming you left sigh
haven’t left, still in a bank but tbh we don’t have great sales and trading desks (mainly just equities and fixed income). theres cap markets syndicate desks which seems interesting but unsure how valuable/useful that experience would be
Look into origination or structuring roles at banks or large energy companies to leverage your working knowledge of balance sheets, unique pay structures etc. Any other way you would likely be so over qualified for the job you’d probably be turned away. My old head trader use to say “being overqualified is the same as being under qualified in my eyes”
Overqualified isn’t exactly the right word but you get the point I think
No he's not qualified. Investing and trading are opposite ends. If he she was on cap markets from baning that's make more sense but this is just hogwash.
What energy product do you trade? What are your structurers/origs backgrounds? None of mine have ever been traders. Two of mine come from non energy backgrounds, one was a banker. I’m a gas trader without ever going into a rotation. Your view seems to be from the sidelines.
still in 1st year of IB, also have some cap markets structuring experience from an internship and have traded numerous products since hs (obviously not in any professional capacity). Since you’re say being overqualified is bad - would you also say it’s better to jump ship to HF straight from IB vs going to PE for a year or two first?
also been listening to the markets wizards series, wonder if u can recommend any good books
Just a student so take my advice with a grain of salt
Commodities Dymystified I think is a great 80 or so page primer by Trafigura if you don't really get the layout of the game.
Trader's Manual by Joel Rubano is also great. I think World for Sale is neat if you want to learn really about the history of commodities trading, but it's quite a long read.
Being an energy trader during the Trump administration can mean basically that you can get fired by the consequences of one tweet or bold geopolitical move (quite a number were last week). Years of build up, training, and chasing leading to random luck blow ups. Grass is not always greener
You won't. Trading happens via rotational programs and your skill set is long term investing. Not day to day second to second decision making. You're on the opposite end
Investing and trading are the two opposite ends of the spectrum. Most traders will see you that way too. Great strategy long term. Very questionable short term since developed the other way.
I mean you just wouldn't. Risk management roles require a vastly different skill set. Not to mention you have no sql python or vba experience. A lot of these roles get filled by data quant guys transitioning. Sorry to tell ya bub
Some of these comments are valuable, but let me give you my honest take as a power trader for over ten years: I started out as a trade floor compliance analyst, skipped the traditional path and went straight into RT power trading after 2.5 years.
So, forget what any of these other jokers say about you not being able to do it. They’re prob just also unhappy in their seat. As a manager who interviews and hires people, I’d hire you if you proved to me you wanted it more than the other candidates.
Trading can be learned. It’s not innate. Richard Dennis proved this (ref book: Turtle Trader), by hiring bartenders and waiters who had the propensities he was looking for. And he turned them into multi-millionaires and some of the better traders around at the time.
Energy trading is interesting, dynamic, and fun imo. It can also be very stressful. Your path to a risk-taking seat is certainly much shorter in power (maybe 0-2 yrs) than in nat gas (5-10 years unless you’re an absolute monster). Not to sound arrogant, but I don’t care what others say abt those timeframes bc I’ve seen this play out time and time again, so take my word for it.
The number one question to ask yourself right now is “why do you want to trade?” Answer me this and I’ll tell you your likelihood of success. Also, tell me how much you want to do it. Those are the things that matter in the end. It’s the psychology of it. Trading is highly psychological. I’ve seen PhD quants who can’t make a dime bc they have no balls and no risk tolerance. I’ve seen ppl that sound ignorant AF but somehow can make money. It all depends on you and your tenacity and judgement.
There’s no “back door” to getting into this. My #1 recommendation: if you’re willing to relocate, and you really want to do this, then apply to every RT trading, scheduling, or power analyst role you can find. Power is 10 times more interesting and volatile than nat gas. But natty can have very high vol too. Fundies are king in commodities markets. Learn the fundies.
Quick state of the industry: successful spec traders are being pushed out of the market by algos arbitraging every opportunity into the ground. There will be less and less of them as time goes on - more of them are functioning in pods or using cross-product optionality to improve overall opportunity and exposure. However, there are more physical-based power opportunities than ever before. You can be an asset-backed trader. Data center developers and tech companies like Google and Meta are hiring power traders to manage energy supply - their largest cost. BTC miners now have power analysts/traders. It’s a diff game now.
But. You can do it if you really want to. The negative comments are just noise that will fade away. Trading exposes your true self and how you handle pressure. Do you crack, revenge trade, rage? Or do you maintain composure, calmly reassess, and get back in when timing is right? Bc those are the kinds of traders I’d want on my team. (And for the record, I’m always looking for good talent and currently manage a pod with three other traders under me). DM me if you want to chat deeper. You can do this.
I’m a power trader of over ten years, currently run a pod with three other traders for a medium sized prop shop. Spec only.
I’ll try to keep this as brief as I can while still being helpful. Don’t listen to the negativity here. These guys are prob just unhappy in their current seats and it’s easy to be a Debbie downer, keyboard warrior.
What’s not easy is being kind and helping ppl, which is what I’ll try to do. I started my career in a back office role, skipped the traditional path, and went direct into RT trading after 2.5 years. If you want to trade power, you’re looking at 0-2 years if you do it right. For natty, likely 5-10 years, unless you are downright heroic. But power is 10x more interesting, volatile, and fun than gas. If I switched to trading only gas, I’d be bored outside my mind.
Here’s the path: if you’re willing to relocate, apply to any RT trading, scheduling, or analyst roles you can find. Don’t worry about the long term path yet, just get in. Things that will matter most in my mind (and this is what I’d consider if hiring a newbie): drive, mental fortitude, and reason for wanting to trade. If you tell me your reason, I can tell you a rough likelihood of whether or not it’s a good fit. Convince them you want it more than any other candidate. That’s how you get in. Bc the ppl who are successful at this aren’t always the smartest guy in the room. They’re the most driven, savvy, adaptable, and emotionally intelligent ones.
Trading is very psychological. You just won’t know how you’ll react until you actually get hit. Just get up. Calmly reassess. Make necessary changes and come back better. Never try to make your year on one trade. That’s how you blow up. You don’t go full Kelly in power markets. Quality over quantity. Risk management first. This whole game is all about risk management.
Quick state of the markets: many spec traders have been pushed out of the market by algos arbitraging every opportunity into the ground. Strong price convergence and crowded markets decimate any clear opportunities. Find an edge. Play to that edge. Find a mentor who is actually good. Learn as much as you can from them. There will be less and less successful spec traders as time goes on. But there are more asset-related opportunities than ever. Data center developers and tech companies like Google and Meta now have power traders to manage their highest cost - energy. BTC miners have power traders/analysts for the same. And there’s always asset-backed trading around generation. If you’re trying to go the spec route that’s fine, but I recommend getting into a pod (increasingly common) and diversifying the products you trade to create more opportunities. I’m happy to chat further if you want a more in-depth convo and I’m a mentor on this platform.
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