Be a commodities trader

Hi,

So does a broker make more money or the trader does? And what is the job scopy of a broker and a trader? Or should i say what is the differeces.

[cityhunter66]

Originally Posted by Wong--

Hi,

So does a broker make more money or the trader does? And what is the job scopy of a broker and a trader? Or should i say what is the differeces.

Oops, this reply is more than a year late. Anyway, the absolute amount depends on the capital of the trader. Broker makes money via the comms generated from his clients, so if he got very big clients he'll make more. Trader needs quite a bit of capital, but he keeps all his profits....also have to pay for all his losses.

[love]

so then how do one become a commodities trader? like what certs to take ?
Any advice?

[cityhunter66]

Originally Posted by love

so then how do one become a commodities trader? like what certs to take ?
Any advice?

Think have to take some financial exams...check out the MAS website for more details. The exams are not the problem, you don't become a trader just because you passed the exams. Have you traded anything before?

[love]

nope im only in retail banking sales selling financial pdts to mass customers but do commodities trader get a basic pay? and the pay range is?

[cityhunter66]

Originally Posted by love

nope im only in retail banking sales selling financial pdts to mass customers but do commodities trader get a basic pay? and the pay range is?

Then i hope you have some friends in the company you're interested in, or your bank got trading branch. Cos if you got no experience, i don't think they'll hire you...or be ready to accept low pay first until you can trade well.

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!

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!

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.

Thanks for the prompt response. My understanding is that there are pure paper traders in commodity firms? i.e. they are not on the ground/involved in the business development (physical) aspect. As they would need to monitor the markets and their trades. Anyone knows how's the pay and prospects?
Not really into the IB side of commodity trading as 99% of ppl won't qualify for them including myself..not trying to say major commodity trading firms like Glencore, Noble are easier..they are definitely tough to break into as well..im looking at smaller/ less prestigious firms from a more realistic point of view. Thanks.

Originally Posted by Unregistered

Thanks for the prompt response. My understanding is that there are pure paper traders in commodity firms? i.e. they are not on the ground/involved in the business development (physical) aspect. As they would need to monitor the markets and their trades. Anyone knows how's the pay and prospects?
Not really into the IB side of commodity trading as 99% of ppl won't qualify for them including myself..not trying to say major commodity trading firms like Glencore, Noble are easier..they are definitely tough to break into as well..im looking at smaller/ less prestigious firms from a more realistic point of view. Thanks.

There are definitely pure paper traders in commodities house and major oil companies, but their function is usually purely prop. And prop trading are usually reserved for veterans with solid track record (we call them money printing machines) - it is too risky to give a firm's capital for a young punk to speculate.