Be a commodities trader
 

SMU has launched a course in commodities trading for its students, reported the Business Times today.

Students get to learn about things like agri-commodities, oil and energy products, transhipment of commodities, financing, and management of credit and operational risks.

I think it's a good start.

As mentioned previously in the top 100 jobs in Singapore, the 75th-percentile commodities futures broker can make $10,000 per month. And this excludes bonuses and commissions.

http://www.salary.sg/2007/be-a-commodities-trader/

39
 

Hi there,

Am working as an IT manager for 5years now and thinking of switching to another job nature. What qualifications/education/knowledge do I have to pursue to become a commodities trader?

Looking forward to your reply.

Rgds,
Libra

40
 

Hi Libra,

The short answer is that if you know the right people, you can get in pretty easily. I know of airline stewardesses who switched to commodities trading simply because of friends' recommendations.

Qualifications are secondary. Really.

So, do you have friends in this line who can help you?

Wishing you all the best.

144
 

Commodities TRADER and commodities BROKER and 2 VERY different jobs...

248
 

Hi there,
I am an engineer. Decides for a career switch. I knew that academic qualifications are secondary to become a commodities trader. But that could also work against me, cause there is nothing you can work towards to embark on this career. Usually people who get into this lines are through friends. If a company is looking for one, usually it must come with prior experience. I would like to learn more about this line. Please revert. Thanks.

Alan Tan

249
 

Hi Alan, it's quite hard if you do not know of people who can pull you in.
If money is the motivation (nothing wrong with that), you might wish to look at alternative income sources while "working towards" or simply waiting for the commodities opportunity to happen.
Or you can further your education, not just for education's sake, but more for the purpose of knowing more people.

1802
 

Hi,
Can someone enlighten me what is the differences between trader,broker and dealer?

2256
 

hi can i know what should I do to have a head start to become a trader

2369
 

A broker is a middleman.
A trader on the other hand does trading on commodities (buy\sell)
There are 2 types of traders. Proprietary traders and market traders
Prop traders basically buy\sell accordin to what they think will be profitable.
Market traders maximise profits from trade requirements set by their sales team.
Dealer is usually an interchangeable term for trader.

2476
 

Hello

Can I check are there any difference between start point 1: Students get to learn about things like agri-commodities, oil and energy products, transhipment of commodities, financing, and management of credit and operational risks.

start point 2; commodities futures broker

3889
 

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.

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?

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.

Securities trader
 

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.

Securities trader
 

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.

Securities trader
 

Thanks for the insight. Is it possible for anyone without physical trading exp to end up doing
paper trading in commodities firms?

I'd be surprised if there is quite a fair amt of speculative outright trading besides the hedging, basis arbitrage, spread trades etc. (Other than the biggest firms) I think this is under the media/public's radar..

I suspect the big money makers mentioned in this salary forum are referring to the physical traders, who can bring in the deals due to well established relationships.

Just speaking from a purely layman's point of view. Experienced ppl/insiders pls kindly contribute. Thanks!

now my friend, if you are not entirely sure of what's going in the commod trading market, then probably you shldn't comment.

to be a good physical (i reckon you meant oil) trader, you better make sure you start off with operations...and a good physical trader isn't just relationship building/biz development or old boys thing...oil scheduler?? the position is called operators, an oil scheduler is somebody that works for the refinery and out of every 20, only 1 will ever have the chance of being a trader...

there's a reason why physical traders are always more sought after than paper traders...let's put it simply a good physical trader can be a paper trader but a good paper trader can never be a good physical trader...

qte-
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.
unqte-

my friend perhaps you are not from this industry - operator and scheduler means the same thing. Just look this linkedin Peter Baiardi | LinkedIn
Most ppl call themselves scheduler rather than operator

Clearly u r not in the line. Waste of my time to explain/argue, u can try and act what u want. But Firstly they are called operators and secondly I believe my last 8 years trading in both an oil major and trading house shld be sufficient experience to know what I'm talking about.

+1 i'm a physical commodity trader.

My company does trading of oil and gas. Pls do drop me a PM if u have any suppliers and buyers. Thanks!

anyone else in this line?

Looks like the commodities line is quite quiet or lacking interest. Maybe i post some salary related information and people might get more interested to join. My history has always been in physical commodities with some paper experience.

I started 7years ago as operations assistant in a metals company. Salary 3k. Promoted to junior trader just before i left after 1 year. Slight increment to 3.2k.

Jumped to agriculture sector as junior trader and annual increment exercise salary went up to 3.85k. This is at yr3.

For Yr4, i left the commodities industry for personal reasons and didn't do much work actually. Did my own thing and see more things around the world.

Yr4, i came back into the industry after realising i still love the industry. I got this opportunity through a recommendation. 5.6k.

Yr5, internal increment as did well 7k. Then nearly got poached to go into my previous sector. Discussed nicely with my boss my situation. 10k.

Yr6, still 10k. Left the company after having differing opinions on work with new bosses

Yr7, started in new company 12k.

Above just base salary only.

I realised once i hit about 5-6k. I was contented already. I didn't spend necessarily more when i earned more after that and didn't really need to work for the money. Just worked for enjoying it and love the challenge. Drive a simple car for family use. Can afford some luxuries once in a while. Give more to charity and to church. So pretty happy.

I have been deeply blessed to rise up like that although yes i know there are others better than me but more important is i'm contented with what i have and plan to give more as i earn more as really don't need it. There are still alot of poor and struggling people in Singapore so i donate to charities who target these groups mostly.

Cheers

just got into agri comm paper trader via programming strategy. it's like a normal futures contract together with S&P500, corn, wheat, lean hog, etc. it's not something one can get into via exams or qualifications. new reports tend to give less focus on agri comm, which explains more arbitrage opportunities, like what my shop is currently doing. if you want to come in, be prepared for plenty of hard work. you are up against really experienced people here.

Bonus
 

That was really awesome. Can you pls share what were the bonuses like as well? Thanks

i dun doubt there are people who did well in commodities, but it really depends on the product and company.

i came from base metals previously and the industry is like sh|t now. look at how much copper has fallen from its peak since pre financial crisis. look at china's slow down and china is the biggest buyer of commodities. look at how deutsche bank has laid off its whole commodities unit. look at how JP morgan wants to sell its oil unit to mecuria.

just offering a different view. go into the industry with ur eyes open.

I think it is **** if one only gained his skills in the paper trading side of commodities. The physical side may not pay as crazily as the paper but it is alot more stable and the business is there for thr long run. Paper trading desks can just close as easily as they are setup. You pointed out correctly how banks are closing their desks now. Thry opened with much fanfare and a boom in 2007 but now all forced to sell or close their desks to focus on only core bankinh businesses.

Also metals will always be the first loser in a global economy slow down even for physical commodities as vols can shrink significantly. Pple can build less stuff and world economies still get by. Not for agri and oil

How do you guys feel about a career in finance in a commodities firm?

Thanks for the honest sharing above and glad to hear that you're able to be content with what you have. I started as a trainee in a large agri commodities firm with <3k salary for about 1 year plus, before recently being confirmed as a junior trader at around 3.5k+. While the revised salary finally brings the pay to fresh grad levels, they are paying white fresh grad expats more than 2x locals salary for similar trainee/junior trader roles in SG. Can't help but feel a sense of injustice on the different treatment. I have been working to prove myself and get recognised, but its like running a race with a handicap. Was wondering if you had a similar experience and how did you deal with it? General advice very much appreciated as well!

sorry friend, but the ang mo expat pay has always been like this all along in singapore. white counterparts are paid 2x more to counter the effects of foreign exchange. not to forget they still have to pay tax when they are abroad. worship the white.

This is quite common still. And you must be still new in this industry? The pay diff is quite obvious in the first couple of years in this industry. It shd be less later on. Many companies are like this, some companies it is more prevalent, some less. You just hv to find one which really values and pays you for your contribution and your skin color.

For where you presently are, you shd see whether your good seniors still stay. If they all leave then maybe u shd too.

Thanks aplover for your helpful comments - I'm indeed still new and trying to establish myself within the firm and with external people, thankfully with some success. I'm also on the lookout for a good boss/company who values me and whom i can contribute to wholeheartedly - but that's so rare to find isn't it? :)

My Singaporean seniors are staying because the firm does provide learning opportunities which are hard to replicate outside, although they continue to be underpaid vs expats despite their contributions.

On the bright side, I think the management is starting to see the value of hiring Singaporeans (partly spurred by recent change in govt policy, partly because we are higher on the value/cost curve vs expat grads and can stay in the region for the long term) but its a painfully slow transition process. Each batch of my seniors have communicated in various ways that the company should pay us fairly (4 years ago trainees are paid less than 2k, without a pay raise for confirmation), and our lot has improved over the years, by proving with consistent results that we're worth it.

I hope that this post will encourage my fellow Singaporeans in the commodities industry to press on in adding value wherever you are, to support our fellow brothers and sisters and to collectively communicate for a fair package based on what we bring to the table.

Any tips on securing a trainee trader role? I don't see many openings around.

I have been working in Banking industry for more that 8 years now, wondering if I am able to enter commodity trading...

I don't think your mgmt will really change. I left my previous company becoz I know they will not change on this pt. today I'm glad I moved and my value is a lot higher than some of my peers who stayed. Agree it is a combination of factors but fair compensation is very crucial which will determine your next few jumps.

There are. Quite a lot on jobsdb.com n others

If you are willing to invest time to learn the ropes as an analyst or operations person first starting at avg 3-4k salary. Why not? But then you might not make the cut as a trader ultimately. Will you be ok with that?