Commodities Trading Jobs
Kind of a shot in the dark here, but I'm currently a US military officer working in East Asia toying with the idea of transitioning into the world of commodities trading in the next couple years. I'm a news junkie with a passion for markets and geopolitics so commodities seemed like a natural option. I've always planned on getting an MBA after getting out, but I'm not certain how much that would actually assist in the transition. Not sure where the best type of firm would be (BB/major/trading house) or even which would be most likely to give me a shot based on my unique background:
Strengths:
-Intermediate working proficiency in spoken and written Mandarin Chinese
-BA in Economics with 3.3 GPA from an Ivy League university
-91st percentile on GRE Math, 94th percentile on GRE Verbal (haven't taken the GMAT since most biz school seem to be accepting the GRE now)
-experience networking and developing personal relationships with officials throughout Asia (South Korea, Japan, Thailand, Phillipines, Cambodia, Hong Kong, Singapore, Malaysia)
-accustomed to managing strong personalities and assets worth lots of $$$$
Weaknesses:
-zero professional experience in trading
-zero quantitative work since undergraduate education
Any insight that anyone might be able to offer on this drastic a transition or even any recommendations on reading material would be much appreciated.
I think you should be able to swing an interview at Morgan Stanley/Goldman/JPM Hong Kong with your stats. JPM I know for sure is trying to expand their commodities business. The rest is in your hands.
Unless you want to actually trade the physical commodity , which - someone else will have to answer.
Go work for a physical commodity trading firm. You're profile matches up well. Asia is the key end market on the metals/mining side. You don't need to be quantitative at all. You need to be social (for entertaining suppliers/customers), enjoy travel, be international, and of course be somewhat cerebral/analytical (where is the market going, how do you position yourself, how do you structure your offtake and sales contracts etc).
And yes. . . a lot of military dudes like commodities since far off places and geopolitical/sovereign risk is key when assessing opportunities.
Physical traders have various backgrounds so I wouldn't discount yours--in fact the fact you speak Mandarin will really help. Network your arse off (use your Ivy/Military league network) and head towards a phy trading shop.
I'd look at Noble--they love ivy leagues, have a decent trader trainee program and have a strong presence in the east.
Thanks for that advice! How does exactly does a trader's job at a physical trading shop differ from a bank? I'm assuming that at a physical trading shop one is acting more as a supplier to actual industrial purchasers than as a quantitatively oriented pure investor?
It's actually a good question. I'd like to start a thread to see if people can describe what commodity trading divisions are like at banks.
I focus on the metals/mining side at one of the largest physical commodity trading firms. There are basically three key functions: (1) Assets - guys who have more of an IBD/PE background and will look to buy mines/smelters/infrastructure assets etc; (2) Physical Traders - develop relationships with suppliers and end users which has a more interpersonal/sales component. Simultaneously, they're also engaging in geographical, product, and timing "arbitrage strategies" and effectively trying to make bets on the market. For some of the really large players they have such major market shares within their addressable markets, they can actually move the market quite substantially. (3) Paper Traders - these guys help the group hedge out the physical exposure and might also be taking prop positions as they deem fit.
And yes . .. direct to your question . . . you are a supplier to actual industrial purchasers. Depending on the company, you are also investing (not quant investing). More like full buyouts and capital infusions into natural resource companies (more fundamental oriented in nature).
Gotcha, that makes sense. How do most of the physical traders end up in that position? Trader trainee programs for physical commodity firms? Do any make the transition from being traders at banks or traders for majors/end users?
To become a physical trader at an established shop, you either: (a) get hired laterally from another established firm or (b) you have some other background unrelated to physical trading and get hired into traffic (operations) and if they think you have what it takes, then you become a junior trader after 6 months - 3 years of traffic work.
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