Why are people interested in trading & if you work in commodities, why do you prefer working with this asset class over equities & bonds?
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I do commodities in the Ag space - I like the fact that's more of a true global market, with the main factors being supply and demand. Its one of the best examples of applied economics in real life. The main advantage here are arbitrages through supply chains and information. I don't have to be a Phd in Data Science in order to have an information advantage over my market by being 2 milliseconds faster to the market over my competition. Money is made here by creating true value through relationships and connecting areas of surplus to areas of demand or through transforming through form by adding value added processes to commodities by packaging, refining, or storing.
The mindset and risk factors are much more diverse than an equities or bonds. Currently im more worried about supply disruptions that affect the flow of product than I do numbers like interest rate that can be plugged into a formula. In the short term, I care more about rail strike potentials, Mississippi river levels, Hurricanes delaying vessel loading, Ukraine and Russia grain shipments out of the black sea, etc.
Are you in Wall Street silver? They’ve got me convinced. I’m sitting in 150 ounces of AG
LOL Ag as in agriculture not Silver. Sorry about that
This type of trading is done for. Sure there aren't algo bots but everyone uses satellite data, talks with producers, etc so there's no real advantage anymore.
??? ADM trading profit up 74% over last year
Cargill is setting record revenues their last FY of $165 Billion
Even non-ABCD The Anderson's net income from trading activities was up 47.5% YoY
I think with these "unprecedented times" we have shown theres still value in grain trading.
Hot take from Analyst 1-IB m&a
Hahahaha
By your definition , if all the data is known and everyone has it then the market should be liquid AF for unlimited size and we are all just trading against DRW/Jump/Citadel. Guess what bud, market liquidity is trash vs 10 years ago and I’ve never seen more money money and lost than jn the last 3 years. Cheers.
I do trading within FX Options. It’s funny actually. I traded equity derivatives throughout college and always thought that’s what I wanted to do. Then you get an internship and you get exposed to a plethora of products that you didn’t even know about.
So first thing I’d say is keep an open mind. Once I got on the FX desk I kind of knew I wanted to do it. For one, I love options so I knew I wanted to do something with that and then the macro aspect is really intriguing. For one, I get to get a view on the whole world and what’s going on in almost every country. It’s also pretty cool to see how currency pairs move and what drives them. The importance of currency circulation and how companies use it to hedge against their risk overseas. We are seeing it now on earnings calls and how a lot of companies are losing money because of the strong dollar and FX related events. FX also trades 24/5.5 it legitimately never stops and I personally love the thrill of it. I know for some it would stress people out I absolutely love it though.
For example, when the EUR went below parity it was stupidly cheap to go to Europe and travel. I know so many people that took advantage of that opportunity. Also, FXO is considered a pretty technical desk lots of math, probability, statistics and I enjoy that stuff. It’s also like never ending (kind of ties into what I said earlier). In equities you focus on what happens in the US and then the micro factors of the equity itself. For us if you have the JPY book for example. You don’t just have JPY you have USD,EUR,NZD,CAD,etc and every day you have to monitor what’s going in each country and what data they release and how that then impacts your book. It’s constant and it’s always something new. So, for me, that’s why I like FXO.
Just curious what do you mean by "in equities you focus on what happens in the US and then the micro factors of the equity"
Meaning in US markets you’re focused more so on what the fed is doing, congress with taxes, etc. By micro factors you are thinking of the company itself and the decisions they make/news they have specifically. For example, like what does Apple decide to do with their profits. Sit on cash, share buybacks, investments in other areas. Of course this is just a brief description but you can get the point.
instead of asking for the interview question answer yourself, you should know your own answer. if you dont have passion for trading geniunely, which i sense you dont, you wont last
Okay Ken Griffin
Make sure to touch upon your passion in markets and flows
Trading because I find corporate finance boring. Commodities because of the people aspect and not so much maths.
On the mathier side of commodities, unlike above posters, but what sets the field apart even there is the tangibility of it to real world events. Your product has a real supply chain, which can run into all sorts of issues whether it be a cold freeze that shuts down production to pipelines that leak to refineries that catch fire. It is truly changing everyday, and those changes impact prices at each point of contact. This to me is much more intuitive than other asset classes.
And while there is a good point raised above about data availability, this is an opportunity just as much as a curse. The data is almost always incomplete or imperfect, and whoever can make sense of it the best has an edge over those who take it at face value. And human intel from relationships will always be useful to supplement data. Furthermore, historical data is inherently backwards looking, so whoever has the best grasp on first principles drivers and how they impact the future will still succeed, and the data is a useful tool to help validate and backtest ideas for these people, not an impediment.
I'm assuming your talking about my comment from earlier?
Yeah admittedly "this type of trading for" was very extreme so I can see why I got all the MS. Geat point about how data availability =/= market edge. Guess I'm just too used to stock market whereas in commodities it's very different.
Make sure to have a few good stock picks ready
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