Physical Commodity Trading: Useful Accreditations and Skill Sets?
Seeking some advice once again from the physical guys on this forum.
I recently accepted an entry-level role in the physical space. It's a great opportunity, and I'll have plenty of time for learning/development outside of work. So I was wondering: besides networking my ass off and learning the ins and outs of energy shipping & operations, what would be some other skills/accreditations that I can look at in my free time - in order to boost my chances of landing a trading seat down the road?
Would a CFA be of much use in terms of career progression in this case? Or would it be wiser to pick up some additional languages/programming skills?
Would love to hear some thoughts on this from those with experience in the field. Thanks!
No to CFA, almost useless for you, almost.
Honestly just pay attention in your job - nothing else to it. If you work on a floor, that floor is your oyster bay. Talk with everyone, learn from everyone. You won't learn more than you will through your work.
I would agree with this. Time spent drinking with coworkers furthers your career than having a CFA.
Learn logistics. Know your ICOTERMS, Logistics > CFA as someone mentioned above me.
Learn how to build your own supply demand model. Compare it to how your moving product. Learn why the actual flows are different than your model. Ask yourself why and dig into the reason. Adjust your model based on your findings. Rinse repeat.
No need for any designations. Maybe learn python
CFA is essentially useless for this industry. You need to pick-up on why trades are made, start suggesting your own... that takes being observant, sponging up as much as possible of what is going on. Studying for the CFA, or even something more directly relevant like the chartered shipbroker thing if you are doing something that involves vessel transport, any of that would take away from being focused on tha job. Learn as much as you can, read a ton, but don't worry about any sort of certification.
Any reading recommendations? Currently I'm reading The Prize and John Kemp's recommended reading list is so long that I don't know what to pick up next.
Well the classics, Oil 101, King of Oil, Metal Men, Merchants of Grain.
More technical stuff like "Merchandising Grain" which is an agri textbook that does a good job of explaining the basis which is a concept useful in any hedgeable physical market. There is a book about Swiss commodity trading firms.
This right here: https://www.publiceye.ch/fileadmin/doc/Rohstoffe/2012_PublicEye_Commodi…
The Trafi primers and Oliver Wyman research on he field which you should be able to Google.
Traders and Merchants by Chalmin which is pretty outdated but still the only real in-depth book on the field as a whole.
Will the CFA designation help you to become a physical trader? No. Will it teach you anything useful about the physical trading industry? No. Is it entirely useless in the industry? I would wager that there is some usefulness depending on where you are trying to go within the physical trading space. There are many career paths once you start on as junior trader/merchant that aren't necessarily direct trading roles, but nonetheless very important where the CFA could be useful. For example, roles more focused on risk mgmt or port. mgmt could find some benefit from the CFA. But i would echo other users; there are better ways to spend your time if your main focus is becoming trader. For some context... I am 2 years into a physical trading job and studying for L2 solely because my boss thinks its a good idea and you want to be on your bosses good side in this industry. Being well liked by your mentor/boss is one of the most critical qualities to progressing quickly within the physical trading space.
Confirmed about the CFA comment. I've been in physical trading for a short while, albeit in a support role at a major.
They won't even pay for my CFA dues.
Most of the knowledge you gain in physical is pretty specific niche information and learning on the job is a big part of that.
I'd pick up some additional languages and programming schools. The physical space seems very niche.
Niche but it's an easy space to stay in if you have a decent name on your resume.
Agree, learn SQL and Python...and VBA (if you don't know it already)
CFA doesn't hold much relevance in physical trading world. If your desk is involved in international shipping space then I suggest reading up:
There's no magical mumbo jumbo in trading, its all about creativity in how a deal is structured, risk evaluated, and trade executed. This will all be learned in time, and how well you manage it and understand it will be the key to becoming a trader.
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