Career progression at commodities shops

Everyone talks about scoring a trader role at Glencore, Vitol, Trafigura etc after a few years in ops seats.

So what happens after you become a trader at one of those places? What's the trajectory going forward? Not just in terms of money but general career progression.

Do these places operate in a flat structure? AFAIK, they don't really have any similar hierarchy to associates-VPs-directors or anything like that which you'd find in other professions in finance, law, consulting and so on.

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Comments (18)

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  • Analyst 3+ in HF - Other
Feb 14, 2021 - 3:19pm

I'll give a general guideline of how it works for oil in my town. 

1. New grads are analysts for 2-5 years. Some people are analysts into their 40s but most are <30 years old. 

2. After analysts become a scheduler, some new grads become schedules but not as common. Scheduling is a role people can stay in until retirement, most are late 20s to early 30s. 

3. Get an opportunity to be a trader. 1/10 or fewer people will have the opportunity to be a trader, so don't think this is guaranteed or likely. Generally, traders are late 20s to 40. 

3.5 Let's say you were a trader but now you're too old. You have a few options a) retire at 40 because you made so much money trading, not common b) stay a trader, not common because you're tired c) become a scheduler again, respectable route d) becoming the trading manager, not common e) join sales/ business development, most common. 

Generally, there's a wall at 40 in this industry where you've become a manager or not.

Excuse my grammar, I'm too tired to care. 

Feb 14, 2021 - 10:28pm

That age range sounds right. Very flat structure once you are a trader aside from the desk head and whoever his boss is globally (probably whoever runs that commodity).

Then it just kind of depends on people leaving, getting shuffled around, things opening up. The size of physical books can decline or grow based on all kinds of reasons. If you keep bringing more to the table you will stay employed and keep making more. But yes, very tiring. And if you are trading physical, depending on the commodity travel can be banking MD like (fly out first thing in the morning, see counterparty, calls while you are on the road, fly out that afternoon/evening - rinse, repeat). The head of a desk would move over to a BB as an MD. For a trader, not totally sure, VP or Director probably, but if you are trading physical at a Vitol/Glencore/Trafi, the move to a BB doesn't make a whole lot of sense.

Paper guys seems like they can probably last longer thanks to less travel. For a physical trader if you're not likely to be made head of your desk by 40 I think you settle into your relationships and try not to rock the boat. The good thing about that 1/10 figure is that seats are relatively safe for someone who keeps producing. I say relatively, because it is only a matter of time someone good, hungry and cheaper shows up.

Feb 15, 2021 - 4:36am

Just a couple of things to add.

- don't think it's that common for heads of desk to move over to BBs? Can't remember when I last heard this happened. At most big players, senior staff turnover is somewhat low. You leave because 1) you retire 2) you have another opportunity (less common to jump between direct competitors - more likely that you go to a smaller shop but you have bigger skin in the game) or 3) you get pushed out. 

- 'Flat structure' to be used with caution. Sure, it's not McKinsey, but there's still "senior" traders and "senior" traders...

- titles mean little in this world, and there's no uniform approach. Glencore is a public company so you're more likely to see refs to "VPs" and "Directors". Vitol doesn't advertise it but it does have partners (big cheeses who own shares in the company).

  • Analyst 1 in S&T - Other
Feb 15, 2021 - 12:01pm

So what exactly happens your first year as a junior trader or equivalent role? Do you start finding email lists and cold calling to find new business or does someone give you a few names to start off with?

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Feb 15, 2021 - 4:07pm

So what exactly happens your first year as a junior trader or equivalent role? Do you start finding email lists and cold calling to find new business or does someone give you a few names to start off with?

Both. Key is to differentiate yourself. You can try trading a segment of the product which isn't covered as much, or you target a bespoke region, etc. 
I will always delegate part of my book to my junior traders, but the point is to help them find their feet and try and distinguish themselves by branching. I don't need just an execution kid.

Aug 24, 2021 - 5:06am

I hear a lot of this "If you keep bringing more to the table" and "you need to find your own place" so you can stay employed but how can a junior trader bring more to the table and secure a spot? Providing same job for lower price? Work longer hours than senior traders? Making cold calls, sending thousands of buy and sell offers? Asking his/her boss for permission to visit new suppliers and buyers in shadiest locations in the world and have actual boots on the ground? At the end of the day, why will a junior trader need a boss to dictate him what to do?!? If he can close back-to-back deal without large credit lines, exotic financing structures and complicated hedging on his own then boss is not needed. I see trading houses nowadays more as a platforms and back office service providers to traders who can't close simple deals and need extensive market intelligence, access to credit lines and infrastructure. As soon as traders don't need this services they will go on their own. Before people start throwing monkey shit and scream heresy I need to inform you that this text is indeed written in a slightly provocative tone. 

Aug 24, 2021 - 11:38pm

That is way harder than it sounds. Yes part moving on up may be providing the same stuff at a lower price, being sharper, more willing to hustle... It's also unlikely your desk has every opportunity in the market covered, so it's on you as a junior to find that out. Problem is the big relationships are already in the hands of the senior people on the desk.

No one is sending thousands of "buy and sell offers" on behalf of their desk unless they want to get fired. Nor are they going to the "shadiest places in the world" unless they want  to get fired.

Eeking out a living on a back-to-back book is very hard work, and it's never going to pay the big money in most commodities. You will make a ton of mistakes as you figure out how to do it consistently. Doing it as part of a big book where there is proven talent to help you grow is going to make a big difference vs running your own op that will be sunk the first time a guy bails on paying you.

The scope of what the small guys do is nothing, absolutely nothing like what the big guys are doing. Any newer shop is started by former heads at the older big shops. There is no substitute for experience.

Feb 15, 2021 - 9:01am

For me it was making 200k+ at a young age and pivoting to M7-IB-HF. All about if you're strictly a prop trader, physical trader, prop/physical trader. The latter imo plays best across career moves. Really depends on the exposure you get, your P&L, firm name etc.

Was at a top 10 shop, if anyone is looking to get into the industry and has any questions, please feel free to give me a ring.

Mar 3, 2021 - 7:34am

Would be interested in knowing more about your move from commodities trading to M7 - IB  - HF

  • Intern in HF - EquityHedge
Mar 3, 2021 - 3:15pm

Would u say it's similar for ags?  Also, would you recommend a new grad starting out in Dreyfus or Cargill?

Sep 14, 2021 - 2:20am

I would recommend a graduate position in any ABCD. It gives you a nice exposure to the business and help you grow with a 2 year training

Sep 15, 2021 - 8:39pm

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