Breaking into commodity trading
Really interested into commodities recently. What are some entry level roles to break into the space?
Feb 21, 2023
Feb 21, 2023
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Comments ( 13 )
Hi derivativeCo, whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:
More suggestions...
I hope those threads give you a bit more insight.
Ops > Risk > Analyst > Pray a seat comes avail and someone takes punt on you > Trading Commodities
Edit: People throwing shit at me, how tf do you think you will break into commodities without first going through Ops/Risk/Trading analyst?
Very specific to power but Intraday/RT trading is often open to entry level traders/grads. The pool of people willing to work night shift, weekends and holidays is small ( ironically IB analysts will end up doing it anyway). But its a good route which I took as did many before me.
I got shit thrown at me the other day for saying that if you wanted to get a trading seat within the first year of starting then physical commodities aren't for you. Not sure what the deal is lately.
Really depends on companies/products they trade. Also bear in mind that at some companies the "Jr trader title" is often just a better name for "trading assistant" where you spend 75% of your time supporting the trading team on analysis, counterparts management, basic paper/physical trading and logistical work. Seen ppl being promoted to Jr trader within 1-1.5 years, seen ppl being on ops/s&d/etc 4-5 years before getting a shot at a true trading seat.
Agreed. But most commodity places you will go through the ops/risk/analyst route. Also agree a lot firms throw the junior trading tittle around without giving much risk. Heck I've seen the Trader title being thrown around without much responsibility.
Atleast in Metals/Grains/Oil there is no way someone gets to take risk within 2 years unless they are really really good (and even then it will be a small book) or they have internal connections.
I think sometimes people fail to realize the Trading Route at a Bank is very different from a trading route in commodities. Unless of course trading commodities at a bank. But in that case you're mainly doing paper. And at a basic level paper is paper whether its in Oil or it is in FI vs compared to moving physical molecules from point A to point B or blending for example.
Yes, there are companies that offer opportunities to trade within the first year but they are the exception, not the rule. The vast majority of places out there are going to rotate you through various roles to learn the business before letting you take on any risk. The only exceptions to that that I have seen are desks where you're trading cheap commodities in such small volumes that if you fuck up you only cost the company a couple thousand bucks (soybean hulls anyone?). I don't think those seats are what the majority of people on this site are after. On top of that, even at those places that do offer roles like that, they are typically filled by someone with previous experience in a different role at the company, have a master's degree with good internship experience, etc.
I have seen one undergrad go straight into a junior trading role because some personnel issues opened up a seat, the timing was right, and management figured why not give it a go. It didn't end well.
Don't think the S&T transplants can grasp that getting opportunity to run risk isn't a given
Find a small shop and network your way in. As many can attest, this is a relationship-driven business and typically at shops w/ >35 traders you can get your foot in the door with a phone call. Work your way up to more prestigious shops from there.
Unconventional but it worked for me.
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