How much PnL do energy traders need to generate to keep their seat?

Hello, had 2 questions around Trading compensation.

I'm an energy derivatives trader at a physical shop. We kinda operate like an internal prop shop. We have targets set and we need to hit them each year. I have 5-10 years of overall experience in the industry but just got my trading seat beginning of 2019. My boss didn't set a PnL target for me but I'm on pace to hit $2M this year. I'm not taking too much risk and have made the PnL on small clips here and there .. didn't have any major drawdowns all year.

Compensation is a voodoo topic (no trader at work feels comfortable talking about it) but I need some info from more experienced guys/gals. Should I expect 5% of book?

Also, what kind of yearly PnL numbers get the attention of outside firms? I'm pretty sure making $2M is not a major deal, so just trying to figure out what kind of PnL goal I should have in 2020.

Hard to diversify trading strats when I have to play within the energy sandbox, can only do cracks/cal spreads/arbs ... hoping someone here has some good info, really would appreciate some solid feedback. TIA.

Comments (12)

Sep 10, 2019

what kind of risk numbers were you given?
how much can you lose?

just google it...you're welcome

Sep 10, 2019

I think i get cut off if I'm $1M in the red.

Sep 10, 2019

i just re-read your OP...with a 1mm stop...2-3mm is probably on target...and i would expect you to make closer to 5mm next year...and then 6-10mm the year after...ect...

just google it...you're welcome

Sep 10, 2019

What is your seat cost.

How much margin do the products you trade require. Ie how physical and how volatile.

What % of the subscription/ vendor fee is allocated to you.

If you are a east gas trader that works in gas and power group. Is gas and power on track to make budget. Then is overall gas on target. Then is your desk on target. Then are you on target. Not saying it's fair but these are all factors when your bone is discretionary.

Is your var 1 million ?

    • 1
Sep 10, 2019

our overall seat cost is around 500k, inclusive of vendor/subscriptions.

We are currently hitting our target as a squad but just wondering what kind of % of book I can expect. Recruiters have told me physical shops usually dole out 5-7% while HF's are above 10% .. just trying to confirm that with actual traders here.

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Sep 10, 2019

in general....just like a good trade...you should be risking 1 to make 2-3, at a minimum...so a 1mm stop, you are expected to make 2-3mm

next year, if you have a 2mm stop, then you are expected to make 4-6mm

just google it...you're welcome

    • 1
Sep 10, 2019

so is hitting 2-3M considered respectable on a prop desk within a much bigger physical shop?

Biggest drawdown I had this year was around $200k, which I don't consider very high. Beginning of year I had a personal goal of hitting $2M and looks like I'm going to get there (currently 75% there). Going to add a few more strats next year and also lever up a bit on my current strat and try to hit $5M.

At what PnL level would I become more attractive to HFs?

Thanks again for the good info.

Sep 10, 2019
Comment

just google it...you're welcome