Breaking into Commodity Trading
Hello Forum,
BACKGROUND: I am a recent (2010) graduate from Imperial College London (University Ranking: 3rd in the UK) with a first class degree (GPA: 3.5+???) in Aeronautical Engineering. My aim is to become a (refined metals) commodity trader.
SITUATION: Unfortunately, I have no previous work experience in the commodity industry, so my plan at the moment is to get a job as a traffic operator (or better trading assistant), so as to gather the necessary experience to later get onto a junior trader scheme.
QUESTION: What do traffic operators do? / What will you be doing as a traffic operator on a daily basis?
This is what I have:
Traffic Operators are responsible for the physical realization of trades. Their daily tasks include:
Processing new orders (Either new, or existing customers)
o Choosing the most cost effective transport route for getting the commodities from A to B.
o Preparing and handling shipping documentation
o Arranging payments
o Mitigating risks:
Credit Risk: Through setting up CDS.
Cargo: By purchasing Insurance
- Monitoring Current Transactions:
o Coordinating Shipment i.e. keeping in contact with the warehouse brokers, shipping agents etc.
o In the event of a delays, find alternative routes
o Maintaining credit lines, shipping lists, debtor reports and exposure sheets.
Is there anything else, or have I misrepresented something?
I appreciate that this is no high tier job that is usually discussed here on this forum; however, your feedback would be greatly appreciated!
In commods trading the bigger places trade physical commods, so it needs to be shipped from A to B, which is part of the cost. So when you arbitrage something this needs to be taken into consideration. Traffic operators arrange the transport and documentation, pretty much everything in your description above.
Yes, experience is good, but to be frank commods trading is a very different animal from most other financial products trading. Most of the traders in the banks come from physical houses (the oil majors or other large commodities houses like glencore/trafigura/vitol/cargill). Don't just focus on banks, there are a lot of ways to be a commods trader, they jump around a lot anyway, depending on where pays more.
Just apply everywhere and you might have a shot. You're going to be lost and feeling your way around for the first 6 months anyway. I think the best thing you can do is learn the fundamental drivers of the different commodities (producers/supply fundamentals and users/demand fundamentals), and keep up with the news. And definitely don't give up. I've met traders who came from risk management and another who was a trading clerk on one of the major exchanges. Oh, and another one who came from a steel company. This is really one area where you can jump in from ops (not at a bank but from a company that deals with commodities), so go for it.
Anyway, since you're from Imperial with a first class a lot of doors would/should be open to you. Just get your story down and be hungry. All the best!
How long does it take for a graduate to become a trader?
Newbie wants to learn (and earn) (Originally Posted: 01/12/2011)
I have no trading experience but want to become a commodities trader. Can anyone please recommend some ways to get started? I would like to read some books or take some classes that teach the basics and go from there. You may laugh that I have no experience but I am here and I want to work hard so that I can become a trader. Thanks!
search function.....would be the best place to start in my book
Follow this blog: www.energyrtc.com
why do you want to trade commodities?
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