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Originally Posted by Unregistered
Anyone knows the prospects of paper traders in commodity firms? i.e. doing the hedging work (non-physical trading) in a commodity firm? What are the pay and prospects like compared to the physical guys? Can be soft, metals etc.. Appreciate any input from experienced ppl in this industry..thanks!
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In commodities house like mitsui, glencore, noble, etc, usually paper trades (i.e. swaps, futures, options) are used in conjunction with physical for arbitrage, relative value, capturing contango effect, etc
Pure paper traders usually sit in investment banks. Goldman Sachs (J Aaron), JP Morgan, Morgan Stanley run desks here. They do mostly market-making, managing client flows earning bid-ask spread while running some basis risk.
Prospect is good if you are get in.
Physical trading tends to be more relationship building, business development type with well-establised old boy network.
Paper traders tend to be very well-educated quantitative type usually comes from ivy league, similar to financial derivatives trader.
To get into physical trading, most start off as oil scheduler i.e. someone who sorts out the logistic part of physical delivery of oil.
To get into paper trading, you should join management trainee program in GS, JPM or MS.
BP previously takes in trader trainees fresh from university, not sure if this is the case now.