Day in The Life of a Commodity Trader

[Daniel Plainview]

Indeed, it's always worth getting a good night's sleep, 7 hours at least if you can, otherwise it's very easy to slip into a cycle of constant fatigue, which can have serious consequences.

That being said, there are times when getting by on a few hours' sleep is simply part of the job. Client entertainment can be brutal at times. International Petroleum week in February, for example, is the time when global oil professionals from around the world are in London to mingle and do business. Most commodity salespeople will be at one party after another during the week in the evenings, and conducting meetings in their office and over lunch for their high-value / prospective clients throughout the day. And while that might sound appealing, you'll be exhausted by the Wednesday/Thursday. 3 or 4 hours sleep per night is about standard during IP Week!
But of course as a salesperson it's a great opportunity to network and raise your profile.

As Alex also points out, the location of your client base is another major factor. Other than trips, you might have to get into the office at 6am to speak to an oil producer in Australia, or stay late if you have to speak to a fund manager in San Francisco. But that's all part of the fun of sales!

 

[AlexLielacher]

What's the average amount of sleep for people in these varying positions? 7 hours?

That really depends on when you go to bed. But getting up at around 6am is pretty standard, so yeah around 7 hours sleep on most nights.

If your client base in overseas then you do more client trips and less entertaining during the week. If you have a UK client base then you'll have at least one evening out with clients and a few coffee or 'at their office' meetings with clients during the week.

 

[Fast Track]

What's the average amount of sleep for people in these varying positions? 7 hours?

 

[Freddy41]

Very detailed post! Sounds exciting, Thanks!

 

[Daniel Plainview]

For those who are considering a career in sales, I’ve decided to outline what a typical day is like for a junior on a busy sales desk. My first front office role was as a junior salesperson, supporting an EMEA energy sales team covering oil and gas derivatives. Below are just some of the main responsibilities one can typically expect to carry out as an analyst who is about 6 months into the role:


06:30 - I allow myself one hit of the snooze button before I’m up and ready for the day. I grab a quick coffee on the way to the office, during which time I check my Blackberry for any overnight price movements and/or major stories, particularly from the Asian markets. I am on the desk by 07:20 at the latest – an ideal time to contact European clients who are mostly one hour ahead of London, and are just getting into the office themselves.

The first task is to check the status of existing client orders – have any been filled during Asian trading hours? Is the market approaching any target price levels at which clients have indicated trading interest? A quick chat over Yahoo messenger with the Singapore desk confirms that nothing has been filled this morning, but the market is approaching some important order levels. By 07:30 every London salesperson is on the phone with clients, discussing potential market-moving events during the coming day, such as the release of US unemployment figures.

The Asian Trading Window is from 08:00 to 08:30, which means that my traders are mostly busy quoting prices for the Singapore desk during this time. This gives me the chance to write the Energy Market Update, a summary of oil market trends over the last 24 hours. This is normally sent to the global client base before 09:00 at the latest. While writing the report I remain alert to answering the phones and watching for changes in market prices. While a colleague is on the phone to a client, for instance, I am on hand to provide another of his customers with a price indication, as well as to explain what is going on in the various crude and refined products markets.

One of the team’s biggest clients arrives for a scheduled meeting at 09:00. My boss wants me to join him in the meeting. I am mainly there to observe, although I assist my boss by providing important current figures which I am expected to know, such as OPEC production levels and refinery market spread values. I take notes of important points mentioned during the meeting.

Having been in the role for 6 months, I have recently been given my first clients to cover, under the guidance of senior management. One such client phones me at around 10:00 to enquire the price of a Gasoil call option. After giving her the price, she informs me that it is close to her target buying level. I immediately inform my options trader of this information, and to let me know if/when this target level is reached. The trader does so about 30 minutes later. I immediately inform the client, who decides to trade. I also complete a trade on behalf of another senior salesperson who is off the desk. I follow up with email confirmations of the completed deals, outlining the specific trade details which are used by the back office to generate official trade confirmations.

I take lunch at 11:30, again to coincide with European clients being an hour ahead. While lunch is normally eaten quickly at my desk, I make sure I eat a decent amount to energise me for the afternoon. I also make a round of teas for the desk – a vital support task!

It’s 12:00 and the Singapore team is leaving the office. As the junior, I am responsible for monitoring outstanding Asian client orders in case they can be filled during London trading hours. I chat with Singapore marketers, who ask me to give certain Asian customers a call if market prices reach specific levels.

By 13.00, the reduction in chatter between the traders and their brokers indicates that the market has quietened down. I take this opportunity to cold-call a potential customer. We have a productive discussion, in which I explain the services that our team offers, as well as gaining an understanding of the target’s business operations and energy trading requirements. We reschedule a call for 3 days later, allowing my target the time to obtain internal approvals to establish a trading relationship.

While it remains quiet on the desk, I also check in with the credit and legal departments. While not the most glamorous aspect of the job, this is essential to ensure that the process of credit approvals and ISDA documentation negotiations with new clients continue to move forward. The faster these processes are completed, the earlier I can trade with such clients.

Today is Wednesday – an important day in the oil markets as 15:30 marks the release of US government data showing the weekly changes in inventory levels of US crude and refined products. This week, the data reveals that stocks have been accumulated by a greater amount than expected by analysts, which immediately causes the oil price to fall. Traders notify me that two existing client orders have been filled, which I immediately relay to clients by phone.

It’s 16:00 and the oil market continues to plummet during the European Trading Window – the sales desk, including myself, contact those clients with potential buying interest, such as airlines and shipping companies. We are now very busy – prices are almost continuously being quoted by traders, which we relay to customers both by phone and by Messenger. Deals are being done every few minutes. After I inform the CFO of an airline company about the falling price, he decides to buy a small volume of Jet Fuel Swaps. He also leaves a big order to be filled should the jet fuel price hit a lower price threshold over the next 24 hours.

Another client would like to trade a sizeable ICE Brent crude 3-way collar, but this trade could exceed the client’s credit limits. I must run a quick Value-at-Risk (VaR) analysis to confirm whether the trade can be accommodated. A mistake in the analysis could mean that limits are breached and client trading is suspended so it is important to be meticulous in running the analysis – the longer I take, however, increases the risk of the client trading with a competitor. The pressure mounts. The analysis reveals that the trade can be executed – I insantly tell my boss, who trades with the client.

By around 17:30 things are more subdued again. After another round of teas for the desk, I read a report on the airline industry – a sector I am hoping to cover in more depth as I develop as a salesperson. I also write a detailed recap of the 9am client meeting to all relevant parties - a summary of the main discussion points as well as outstanding actionable tasks to move the trading relationship forward.

I send an email to the New York and Singapore desks outlining the outstanding client orders which are to be covered after London trading hours finish at 19.30. I also write a brief end-of-day market update – bullet points of the main stories of the day – which is sent to the global client base. Finally, I go through my checklist to ensure all outstanding tasks are completed before I leave.

Out of the office by 20:00, I head out to have a relaxing dinner with friends. A couple of hours later and I’m back home. By 23:00 I’m falling asleep to an episode of The Sopranos. A good 7.5 hours of sleep later and it’s time to do it all over again.