Entry level positions for electricity trading?

Hi everyone,

I recently interned with a data + analytics provider for the electricity and power markets, and since then I've been extremely interested in a trading job in the field. Coming from a more traditional finance background, it doesn't seem like there's as clear of a career progression/path (at least to me). I'm not sure where I need to be looking in the short term to reach the long term goal of being a trader at a prop shop/HF trading electricity. Any advice on what types of jobs/firms I should be looking at for graduation would be much appreciated.

Additionally, any information on how to best prepare for these types of jobs would be great. Book, software, and skillset recommendations would be a great help.

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Comments (33)

Most Helpful
Jul 18, 2021 - 10:49pm

Excellent.  Another convert to our natural gas and electricity religion.  Glad to have you on board and along for the ride.

If you are serious about the business and do not care about prestige or location, then your choices for starting out on the 24 hour desk / scheduling / structuring are very good.  One quick look at Linkedin should give you a decent idea of the current ops.  

Remember.  We are a highly personal business regardless of at a bank, physical shop, hedge fund, utility or power/gas marketer.  NETWORK.  This field is mostly about relationships, hard work and not being a prick.   There are a few of us on here, so ask away.

Namaste.

D.O.U.G.

  • 5
Jul 19, 2021 - 12:12am

Hi, thanks for the response! I understand what scheduling is, but could you explain structuring & the 24 hour desk? I'll probably have an opportunity to return to my company for another internship as a power market analyst, and hopefully roll that into full-time. Is that something that would be equivalent to these entry level positions? I thought the work-life balance and culture at my internship was great, and was a lot more relaxed than the finance stuff I'm used to, however I wasn't sitting with traders (which I would be as an analyst), so that might change.

Jul 21, 2021 - 9:39am

Been around a while (2002 if memory serves).  Solid.  Conservative.  Stays out of the news.  Trades all markets / all strategies.

Namaste.

D.O.U.G.

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Jul 19, 2021 - 12:52am

Sure.

Most traders start out on the 24 hour desk.  Since we are the only product in the world that trades 24x7x365, someone must always be on the desk trading real time and balancing the system.  This is shift work and excellent hours.  Generally any given week it is 4x12 days, 3x12 nights, etc.  You will probably draw thanksgiving day, christmas day and new years eve as a newbie.

Structuting is deal analysis, transactional analysis, fundamental analysis and idea generation all in one. You have to know all the deep math and analytics and explain it to traders and senior management.  Example:  D.O.U.G. -- How much should I charge, and what new innovative structures can we the new electric arc furnace that wants to come to my area knowing that senior management loves to cut ribbons at ground breaking?

Answer THAT question correctly and you are on your way, kid!  Oh did I also mention they want it 100% PHYSICAL green power?

My world sucked some days!

Namaste.

D.O.U.G.

  • 2
Jul 19, 2021 - 7:03am

Lots of options for sure. DOUG has great information

Any local electric utility most likely trades the power/gas themselves. So start by looking at your utility bill and browsing that companies website

There are also lesser know but large regional utilities..KCP&L for example. I remember i almost went to work for them..but the job was in Topeka Kansas which was a no-go for me

Jul 19, 2021 - 7:20am

Topeka?  Not terrible.  Could live in Overland and commute. I think NPPD in Doniphan and NIPSCO in Hammond are far worse.  Although California is on my no go list!

Namaste.

D.O.U.G.

Jul 20, 2021 - 9:05pm

OP.

If you are reading this Tenaska is looking for a RT trader.  This is a top shop.  Well worth the look.

Namaste.

D.O.U.G.

Jul 20, 2021 - 10:55pm

No.

A 24 hour trader trades the firms residual position (within reason) in the hourly/5 minute LMP markets (or hourly in non-ISO markets.  They may buy or sell based on customer load /weather etc.  It is where your choices can make or lose a lot of money (given residual position size.

Example:  In ERCOT, being short 50 MW for 24 hours at $2,000 could cost your firm 2.4 million in one day.  During 2009, the opposite was true and folks were losing their shirts being LONG power when it was trading at -$30.  Hell, look for the NYISO thread here on WSO.  It trades at -$1000 all the time.

Namaste.

D.O.U.G.

  • 1
Jul 21, 2021 - 9:40am

Tepper.  Can't they dispatch that system correctly YET?!?!?  Wow.

Namaste.

D.O.U.G.

Jul 21, 2021 - 9:55am

D.O.U.G.

No.

A 24 hour trader trades the firms residual position (within reason) in the hourly/5 minute LMP markets (or hourly in non-ISO markets.  They may buy or sell based on customer load /weather etc.  It is where your choices can make or lose a lot of money (given residual position size.

Example:  In ERCOT, being short 50 MW for 24 hours at $2,000 could cost your firm 2.4 million in one day.  During 2009, the opposite was true and folks were losing their shirts being LONG power when it was trading at -$30.  Hell, look for the NYISO thread here on WSO.  It trades at -$1000 all the time.

go long duk off peak and pray it doesnt trip.....   $18 power goes to $70 quickly 

Jul 21, 2021 - 3:58pm

jfazio

I guess this is a more general question, but are the skills/techniques used for the energy markets similar to those used in financial trading? Are you looking for relative value, buying when it's "cheap" and selling when it's "expensive"?

nope.  commodities is the only product that selling at a massive loss is still the right trade.... 

Jul 21, 2021 - 1:14am

I read Energy Trading and Investing back to back and also looked through the training materials of different ISOs (PJM, MISO). There is a podcast called chat with traders and look up Brynne Kelly's episode. She breaks down natty and power trading pretty well for anyone starting out. There's also a great 1-hour long podcast with John Arnolds on the digital wildcatter podcast. 

.
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