I got a few PM's and the same questions come up so thought I would post here to get advice out in the open.
How do I relate my non energy internships to energy trading interviews?
The worse thing you can do is try to make your previous internship sound like energy. At the end of the day they want to hire smart kids and take your time to explain what you did and how you did it. Working on a why energy reply is better used then trying to make your investment banking, equity trading or wealth management internship sound like energy trading.
Do I have to work on the phy side first?
No you do not but many shops are major phy players and may not be on your radar for jobs. While everyone would love to trade fin at GS/MS/JP right after school it is not highly possible. Sure it has happen but not often. However, lots of phy shops that may be worth a look.
Are the bb's the only place to trade energy?
No.Tons of places and looking up various nerc events will have a listing of firms.
Is energy trading the new bubble?
I dont think so but once the investment banks got into the game it has become more popular.
Do I have to move to Houston to work in energy trading?
No you do not but a lot of firms are in Houston. I know people trading in Portland, San Diego, Austin, Atl, Tulsa, Kansas City, Miami, NYC, Balt etc etc
if you have any more questions please do post.
Disclaimer - Most of my answers are in relation to Power.
How do I relate my non energy internships to energy trading interviews?
I can second what Monty says on this one. There's no way that a wealth management internship is going to prepare you for a career in energy trading. However, it can be used to show that you're proactive and eager to learn, which is what many energy shops look for because the information about "how" in regards to physical trading is not readily available - You will most likely pick it up on the job.
Do I have to work on the phys side first? There are a lot of quant groups who trade financial products in power, and that's great - more power to them. If you're a math whiz, shoot for them. However, I don't believe that these groups truly understand the fundamentals of the markets as well as physical participants do, and they "blow up" a lot more. IMO, starting in physical is a good way to develop fundamental understanding that makes one a better financial trader.
Are the BB's the only place to trade energy? No - and I don't even think they're the BEST places to do it. That said, if you're not sure that energy is for you, the "name" factor may make them more desirable.
Is energy trading the new bubble? It does seem to be popular on WSO lately, but I don't believe that there is a bubble in terms of hiring in the actual market for jobs. Rather, it seems that the banks are re-staffing after the major cuts a year ago. Overall, there really isn't a significant number of firms that are major players on the physical side, and as such, there aren't jobs just raining from the sky. That said, there is still opportunity if you're willing to start in a more fundamental role such as scheduling, risk, etc.
Do I have to move to Houston to work in energy trading? No - It may have its advantages in terms of networking, but on a daily basis, I interact with people outside of Houston WAY more than I do with people in Houston. Many in Houston play the "marketing" function, while those around the country trade around their assets. Just a few that I can think of - Denver, Birmingham, Kansas City, MPLS, NYC, ATL, Topeka, Princeton, Louisville...basically, where the major utilities are headquartered.
How important do you think math skills are in energy trading?
I think they are very important but I would not say a math major is better then any other major. Some jobs require a very quant background while others do not
How do you think energy risk consulting could translate into energy trading? would an MBA be needed to transition?
Is there a place I can find a list of energy trading firms? specifically by region?
What is the the book that is very good to gain understanding of energy business? I know someone mentioned it on the forum but I cannot find it again. One that would enable me to differentiate physical vs. financial side.
Monty- appreciate your insight. Just curious how long it typically takes someone to become a physical energy trader.
^wondering the same thing like with the Conoco 2010 program, how long will it take? Because it seems that they promote within 12 months into a higher position within a specific commodity. What is the rank within a commodity in an energy firm actually?
some people become traders right after college in real time power trader roles. some do nat gas schl and move into nat gas trading after a few years. I am not to sure on the oil side. a lot of people do different things before entering the energy biz.
Thanks for the clarification monty! I have more questions: -what is a good book to read about physical energy trading? -Are interviews at energy firms like conoco worst or better than at BB trading?
Thanks for the clarification monty! I have more questions: -what is a good book to read about physical energy trading? -Are interviews at energy firms like conoco worst or better than at BB trading?
I would not compare the two since they do different things. Very little overlap.
I really do not know of any books.
How do you think energy risk consulting could translate into energy trading? would an MBA be needed to transition? I don't think it would be necessary. From my limited experience, I have heard of a lot of people moving from risk, accounting, scheduling, etc. to trading.
As far as length of time to become a trader, it really depends on the group. I started right out of school as a phys. trader (on the real time desk such as Monty mentioned), but some groups prefer scheduling experience because it should take less time to get up to speed in that aspect of the job. I think the most common "path" I have heard of is analyst > scheduler > real time trader > term trader.
For books, the options are seriously limited. There's a book by Fletcher Sturm called "Trading Natural Gas" which is pretty good, as it describes considerations in both phys/fin gas markets. A lot of the same concepts overlap power markets. Pennwell makes a few others as well - http://store.pennwellbooks.com/derres1.html
Physical trading is really about geography and the different markets out there. If you do not understand the fundamentals in one area, you can not move out and trade other points. I think by finance you mean risk, because i think its most common for people in risk, scheduling or valuation. Since they get to see the geography and start understand in their head how we can map out the continent and how everything connects to everything else. The traders on the desk would have to a lot of confidence in a new grad to come in and trade a physical product right away because your going to have to work extra hard to even understand how the markets connect to begin with.
PS; what was your background? did you do several trading internships, any in energy?
Ugh, double post. The site is faster, but not when posting.
I read trading natural gas and it does have a lot of info however you will learn almost everything on the job.
I have also read trading "Trading Natural Gas". It has a very good overview of the various products and how they are traded, the way he outlines it is pretty well done. The book is expensive and hard to find though.
You may also want to check out this forum, lots of listings for books there.
http://energytraders.yuku.com/forums/5/t/Books-Papers.html
Trading natural gas by fletcher sturm is really interesting. Half the people at where I interned at last summer has it. It won't teach you how to become a trader but interesting read nonetheless
Trading natural gas by fletcher sturm is really interesting. Half the people at where I interned at last summer has it. It won't teach you how to become a trader but interesting read nonetheless
"Is energy trading the new bubble?" I am definitely not qualified to make a comment on this and I am just offering a different view..
The 2nd day of work last summer, I had lunch with a VP. He asked "do you know what the next bubble is?" I listed some random things. He said "No. Commodities. I am telling ya...... It is coming"
lol obviously different opinion but interesting I guess
"Is energy trading the new bubble?" I am definitely not qualified to make a comment on this and I am just offering a different view..
The 2nd day of work last summer, I had lunch with a VP. He asked "do you know what the next bubble is?" I listed some random things. He said "No. Commodities. I am telling ya...... It is coming"
lol obviously different opinion but interesting I guess
being that the person who told you this is a VP(has spent some time in the industry) I would bet he has been saying this for some time. I have friends in education and they tell me often how much their industry is changing.. everyone for that matter is in the next "bubble"
Hi, after all of the input from monty and others I thought I'd throw my newbie card out as well.
I am a chemical engineer with a little under 3 years of refining / petrochem experience and would like to move into trading raw materials/products or commodities. I've been considering an MBA for a clean transition and move to trading - but don't personally know of anyone that came from a technical refining background and moved into trading, which makes it difficult to find a relevant perspective. Any thoughts? Does anyone have a similar background, or know of this to be a common path? Any advice is appreciated. Thanks.
I know a lot of people with a CE background now in commodities... only 1 or 2 in trading
Would you say that a majority of them went straight from CE to their current role, or did they go back to school? Trying to decide if going back to school is even worth it.
I mean if you want the b school exp... do it. the guys I know did not go back to school. Keep in mind that most bb's this year are not taking mba's or have cut back so you are fighting for 1-2 jobs at the banks that still take on mba's... I think 2007 may of been one of the best years for mba's into energy... lots of firms were hiring like crazy
Gotcha. Thanks for the input, monty.
np. keep in mind that the energy space has up/down and while it may be a slow year for mba's this year it may pick up real fast.
Oil/Dists all depends on luck really. if there's an opening you can be pushed into doing it as fast as half a year into the job (that's the fastest I have seen so far, but this is at a bank, i'm talking about having your own solo book). generally this progression is a bit slower at the physical shops (maybe 3 to 5 years), but u learn a lot more from the various roles you take on before that, like being a scheduler, operator, optimizer, charterer (some of the roles overlap depending on where you are).
keep the questions coming... also anyone in houston come out to the ype event on 11/10... should be very good
Anyone dropping by for APPEC by any chance?
I had a number of questions specifically regarding energy trading as a career...
1) Is it true that on average it only takes 2-3 years before you start trading at a BB ibank, whereas at a supermajor it takes 5-6 years (because they rotate you between risk, scheduling, etc)? I got into a trading program for one of the supermajors for this summer, they seem to have a decent mix of speculative and physical trading so I'm looking forward to the exposure.. but I wonder if it's a good place to start a career.
2) As a trader, you're essentially stuck in trading right? Hedge funds might take you, but you'd be doing the same thing for them as you were before right? Any opportunities for lateral movements from trading to another area?
3) How do MBA programs regard trading? I feel like the only traders who go for MBAs are ones who get bored, got laid off during recessions, or who sucked at trading.
1) no it is not true
2)you can move to a lot of things but the easy route is to stay in trading
3) this is a pretty immature comment. I know tons of traders who were very good who went back to med, law, b school because they wanted to. keep in mind many people have a track in their life. I know a guy who was rocking on a desk who got into harvard law and accepted. another got into med school and accepted.
I dont think their really is a bad place to start your career and no one is going to let you trade soon anyway. maybe you are a great mid office person or avg front office person. who knows. I can say for a fact you will learn most on the job and it may not be something you like. so take the exp to learn as much as you can.
Do you feel that having petroleum engineering experience (working as a production engineer with Big Oil) can in anyway be advantageous for breaking into energy trading?
Yes for crude and products. Not so much for other products.
.
Who trades energy in Miami? Is it FPL?
fpl is not out of miami
.
they get love from most of the bb;s and houston firms.
I start as a trading analyst at a BB in Canada in less than a month. The position is a 8 month term ( i am in my final semester of school so not quite graduated). I have an idea what i will be doing day to day but am not 100% sure.
What type of day to day activities typically constitute this role?
need mroe info
whats your major? what product you trading? Also by BB do you mean one of the big6? Or GS/DB/MS/BofA etc...
Major is BComm/Finance. The position is on the natural gas desk and it is a US bank, think GS/ JPM /MS.
Do you like your job?
and
What is your dream job?
yes
and my bosses job
Reconciling PnL. Looking at bentek and storage data and helping create correlations. Checking out broker trades. Looking at weather vs load data and again trying to build models. May answer the phone to some clients and help create the deals/structures they need. Helping manage transport and flatten the books physical positions etc....
Thanks adehbone, appreciate the response.
Would you recommended getting a M.S in Financial Engineering or a Ph.D Economics if you want a quant role?
either.. get exp and work hard
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