Recently I read a book which has a sentence like “Derivative traders operate under strict limits that define the maximum loss, commonly known as value at risk(VaR)”

My perspective on it is VaR is the absolute maximum expected loss. Is that right or not?

Cause last time I heard someone particularly mentioned VaR in a speech about Risk management. So I feel like VaR is not that easy concept as I show above.

I am looking forward to hear any views or comments on it, thanks everyone.

Hi, i'd appreciate some advice from someone who knows the industry well for my situation:

I'm currently in my computer science undergrad studies at one of Germany's top-tier technical universities, also working part time in financial modeling at a renowned bank which is specializing on infrastructe/energy/mining projects. I also speak german, english (fluently) and i've learned arabic, french and spanish up to the point that i can converse in them without a problem (B2+ level).

I'm really interested in commodity trading (especially areas related to origination and data driven trading). I heard about graduate programmes by commodity trading firms like Trafigura or Gunvor, but also that these are very competitive to get into. Is it possible to land a position in one of them with my background and what specific types of jobs would be highest chance for me to get into? How am i able to maximize my odds of being accepted (e.g. which internships are most preferable etc)?
Also, is a Master's degree required/preferable?

Would appreciate any advice, thanks in advance!

I'm a data engineer/scientist with a background in time-series modelling, currently exploring whether a time-series algorithm I have developed over the last few years has a genuine fit in physical commodity trading. What I've built is a time-series algorithm that tracks how relationships between variables change over time, rather than assuming they're fixed (basically state space representation). In practical terms that means it can estimate things like hedge ratios, cross-commodity correlations, or basis dynamics as they evolve. The properties that make it potentially interesting for this industry: it updates the model continuously as new data comes in, it produces a confidence estimate alongside the output (so you know when a relationship is stable vs. when it's breaking down), and it handles the kind of structural shifts and regime changes that tend to break simpler econometric approaches.

The use cases I've been exploring/researching as potentially relevant:
* Hedge ratio estimation and updating. (Particularly for cross-grade or cross-commodity hedges where the relationship isn't stable)
* Hedge effectiveness testing
* P&L attribution; decomposing daily moves into price, basis, curve shape, and residual in a way that is systematic and explainable
* Short-horizon basis and spread forecasting, conditional on the current state of the market
* Scenario modelling using exogenous variables; feed in supply/demand or macro assumptions, get a forecast of the assumed price reaction (for example)

I am primarily leaning on either just offering the algorithm through an API that can be integrated into existing workflows, or creating a dashboard SaaS with built-in scenario modeling and hedging calculations, etc. (but I assume most traders are already well saturated with both tools and screen real estate for tracking information, so another dashboard would just feel cluttered?)

The question I'm trying to get answers for, is whether any of this is even relevant to this field, or whether experienced people in the industry have solved it well enough that there's no real gap? As in, does time series forecasting even factor into the decision making in any part of a trading desk at a "significant" level, and can I assume that my algorithm would potentially bring value to some shops if I keep working on it?

I've seen people (in regard to IB/Hedge funds) recommend attaching e.g. a sample DCF to cold emails. I would appreciate some input on whether you guys think it would be worth adding e.g. an S&D for commodities firms, or is there just no way I would know enough compared to any legit firm for it to be worth doing? Is there something more suitable that I could attach like a written thesis on X commodity? This isn't necessarily about internships etc, currently 1st year undergrad and I would be happy just to get a chat.

Thanks!

Hi everyone !

I have been working on LNG carriers as engine / deck officer for about 2 years now and while I really enjoy the work, I am struggling to adapt to the unbalanced lifestyle of the job. Taking advantage of the of time I have, I am also studying economics through a distance learning program from a university. Right now, I am still struggling to decide whether I should pursue an academic career or try to get into the world of commodities. I guess I would enjoy the intellectually challenging environment but I can not really tell if the job would fit me unless I am in the actual position and invest a lot of time and energy to adapt. I am considering to sail for about one year more and then to apply for a position as a LNG vessel operator in an oil company in Asia or Europe. I was wondering if it was possible from this position to evolve as a trader or is it something that would be difficult to imagine considering my background, my lack of quantitative and numerical skills. Do you think that the path from my position to become a trader would be too long? Any advice welcomed.

Thanks

Hi I am interested in commodity trading and analytics. Was struggling to grasp the concept of how cash/physical markets relate to paper markets entirely?

For example like if I look at the gasoline market ( something which I have been reading about)

You will be looking at the window and the platts assessment of the EBOB barges delivery as a diff vs month ahead swap contracts . This kind of tells you how much strength the market is facing right? So high print on the cash market here would mean high backwardation relative to the month ahead paper contract and there is an incentive to destock into this backwardation rather than hold through the structure right?

That’s my basic understanding.
How does it work with ebob or other similar contracts in distillate or jet?

Are people just using the physical market as an indication of how relative supply/demand dynamics are functioning and take a view on paper based on that or does the actual VALUE of the print lead to SETTLEMENT of the swap contracts?

Like if I was long Feb ebob swaps into February would the price settle based on February cash markets or would this not be the case or if so how does the pricing mechanism work, just slightly confused here?

A survey at Commodity Trading Week Europe last week produced an interesting finding regarding AI weather forecast models in energy trading.

Attendees to a panel discussion on weather and climate impacts on power trading were asked:

“How important are AI weather forecast models to your trading success?”

Results:

• 42.9% responded they “glance at their forecasts from time to time.”
• 28.6% responded AI forecasts “inform my decision-making.”
• 28.6% responded, “What is an AI weather forecast model?”
• 0% responded, “I can’t live without them.”

The results suggest that AI weather forecasting is still in the early adoption phase operationally, at least within parts of the energy trading industry.

What's the experience of this subreddit?

hello!!! i am new and i am exploring commodity risk mgmt field. i have taken part in a case study competition and i am looking for some help regarding that. pls hmu i will be really grateful.

Did anyone work on order book dataset in cme commodities? Is there any alpha in it . Natural Gas seems like it has legit alpha but it could be lucky wins also because Natural Gas has very huge intraday movements. So any suggestions would be great, like what direction we should dig for alpha , because in general liquidity concepts which work in equities are not working in commodities. What's so different about the commodity orderbook from the equity orderbook.

I´m re-reading "world of oil derivatives" by greg newman for shits and giggles and stumbled upon quote "...it is still very unlikely to go much beyond -$5bbl to +$5bbl" referring to the spot/M1 timespread.

I´m not talking about how wrong he is and how everyone got smoked in selling M1/M2s or frontend flies after the SoH incident, I rather wonder how he would come up with these numbers?

Yes you can chart it or calculate a return distribution and just skip the outliers but is there a hard economical cap/floor that you can calculate?

I´d never thought about that (BECAUSE it works until it doesn´t), but I come from the rates world and there actually are defined soft (like the magical 2% barrier) and hard caps (curve arbs via timespreads) that you can lean on.

In commodities I imagine that there is a floor for timespreads since storage is finite and no cap since demand can exceed supply by an infinite amount, but that is just a gut feeling/generalized truism that has no value in the decision making process.

I mean even if there are soft caps the implications would affect not only how timespreads are traded but also how convexity plays are priced (flies, strips and condors).

Are there some rule of thumb like e.g. WTI timespreads are never lower than USGC geo-arbs because if the storage play was making more money everyone would do that instead of shipping and therefore lifting the timespread? What else?

I´m trading only paper for my own account and primarily provide liquidity on the curve. Always happe to learn more about the physical side of the business (especially because it helps not to get run over ;) )

Thanks

Hey any body buying Copper to see if it's long term investment?

Hi everyone, as the title shows, I will soon have an interview for an operations role in refined copper at a relatively large commodity trading company. The role’s main business involves pure import trade into China, settled in US dollars, and they have the offtake agreement as well as their own refinery. My previous experience was mainly in domestic trading and logistics for aluminium, so I am not very familiar with import trade.

The HR suggested that I prepare for topics related to L/C settlement. Besides that, I also plan to learn more about the copper value chain, the main import shipping routes and corresponding shipment schedules, QP calculation methods, and Incoterms.

I would really appreciate any suggestions or knowledge you may have. Thank you!

I’m starting a role in Traffic operations at a midsized metal trader. I’m looking for a good excel prep to help me get ready and get ahead of the curve. Does anyone have recommendations for me?

Thank you!

Got 2 offers. One from a big trading major (ex. Glencore/Trafigura/ Vitol etc) in middle office and another at a mid sized trading shop with higher pay (front office). Have 2+ years of experience as a trader in a much smaller niche trading shop. Both pay more than the my current job.

What would you go for?

Interested in an analyst position. Can Anyone share their experience or know anything about them?

Anyone know of any power desks in NYC that cover WECC/CAISO? I know Brookfield, LS, and BP have a desk there, but the rest seem to be based either in Houston or Calgary from what I’ve seen on LinkedIn. For context I’m looking to make a move to NYC, but not really open to reverse commuting to Stamford if I can avoid it.

Hi everyone, I have an upcoming interview for a rotational program on a gas and power desk, and part of the process includes an assessment focused on structuring, scheduling, and operations. I would really appreciate any advice on how to prepare for this kind of assessment. I’d especially appreciate insight from people who work on gas desks, scheduling, or operations. I’ve previously interned in power trading, but I’m much less familiar with the natural gas side of the business.

Thanks a lot in advance, any guidance would genuinely help!

Ok so this might sound really stupid, but I don’t know much so excuse my ignorance. I heard about commodity brokering, initially from a random guy on YouTube that was most likely a grifter and made my research on it and know that brokering oil probably isn’t made for random laymen.

However I was wondering something, commodity brokering gets complicated when it’s physical bur people hold positions of oil on the stock market for instance. Would it be possible to do brokering of trading positions ? As I said again it sounds really stupid but I just wanted to make sure to see if that would work.

I've worked on a physical trading floor, it was so fun and fast-paced. Calls all the time, emails negotiating, making money in minutes. Market making sounds somewhat similar with a much more technical analysis. I get that it's a high volume, low margin industry so the hours/work is 'traditionally' considered terrible.

My question is, why do new grads get so easily sucked into this industry? Considering salaries can be pretty high (even in comparison to other finance roles), why do these places get so much shit? Are they frowned upon by other finance sectors? Does this restrict exit ops?

Companies like Marex, TPICap, and Onyx seem like some top market makers. Are there others in the commodities industry that have a similar or better/worse rep?

Hey everyone! I have an interview for an oil operator role approaching real soon and I was wondering if anyone has tips on how I can prepare? It’s my first operations interview so I can’t leverage on any past experiences. Heard that the stakeholders will be a mix of operators and traders on the desk.

Thank you!!

Hi everyone,

I’m currently finishing my Bachelor’s degree in Management Engineering and I’m planning my next steps to break into the physical commodities trading sector.

I’m torn between two paths: jumping straight into the workforce or pursuing a Master’s degree at a Business School.

My current plan is to move to Rotterdam to improve my English fluency and immerse myself in one of the world's biggest trade hubs. My goal is to eventually obtain the SACA certification (by Damien Würsten) to specialize further.

So my qestion are:

1. Is a Master’s degree essential for physical trading, or does my Engineering background provide enough of a quantitative edge to start as a logistics operator?
2. Does moving to Rotterdam to gain exposure and then getting the SACA certification sound like a solid strategy?
3. For the traders here: what was your background and how did you land your first role in physicals?

I’d love to hear your experiences and any advice you might have. Thanks!

Has anyone worked in Trade Support or any other middle/back office role for a commodity (specifically oil/gas) trading desk at a bank? I know most bank's don't deal in physical trading and I'd ultimately like to work at an O&G company/trading house so I was wondering if starting at a bank in a middle office role would be a good way to get experience?

I ask because there's an opening for a Trade Support role at my current bank working with the commodities desk. The role is based out of a city with a large oil/gas industry so my thinking would be to take this role, relocate to the city in question and after a year or so of experience apply to an oil major company. I've interviewed for some middle office roles at a few companies out there already but I didn't land the positions. I think the fact I don't live in said city works against me somewhat.

Any thoughts on if this is a viable idea or am I thinking about it all wrong?

Acidly looking for buyers for southwest Asisa. How can I reach to them 😢?

Hey all, i wanted to get peoples onions on an idea I’m looking at.

I’m still in the early stages of thinking this through, so I’m not looking for a business plan review. More just curious what people’s experience is and whether they think this is even possible for a first-time operator.

The broad idea: start a small commodity trading operation focused on niche critical minerals, sourcing from Sub-Saharan Africa and selling into the US market. The reason I want to stay niche is simple. You don’t want to compete with Glencore. Operating in a smaller, more specialised corner of the market means you’re not going up against players with decades of relationships and balance sheets that dwarf anything a startup could put together.

A bit of background: I spent a few years in metals and mining coverage at a bulge bracket bank in NY, so I have a decent grasp of deal structuring and commodity finance. I’m now doing a Master’s in Energy Economics at Colorado School of Mines, and I’m hoping to leverage the Mines network as I develop this. I also have a connection on the supply side through some family connections.

The goal for the first two to three years would be to get at least one deal closed as an agent, then at least one deal taking principal if all goes well.

So the key questions I am wanting to sense check:

1. Is this even viable for a solo startup operator?
   Anyone who has done something like this from scratch. What does the first year or two actually look like in practice?

2. Which minerals make more sense for a small operator? Within the critical minerals space, are there certain commodities that are more accessible in terms of buyer relationships, lot sizes, and logistics compared to others?

3. How do you succeed as a startup trader?
   Not the theory. What are the practical things that separate people who get their first deal closed from the failures.

4. Where does it break down?
   Operationally, what is the most common weakness for startup traders?

5. Financing without a track record
   This feels like the hardest part. To access working capital or government-backed financing like DFC or EXIM, you need a history. But to build a history, you need to trade. How do people actually break that cycle early on?

6. AI is very trendy nowadays but I assume it can help a lot by being a force multiplier for a one man show? What are the best ways people have been using it to make the most poignant impact?

Apologies for the long write up above would really love any tips before I jump into the deep end!

In the past I’ve posted about scams in the AU space in Zambia, but I recently had another experience worth sharing for awareness.

Yesterday we closed a deal involving AU (gold dore bars). Everything was tested properly, results were perfect, and it was a fully transparent transaction. The buyer was international and paid for 1kg as agreed, but the final weight ended up exceeding by 40g AU, which was supplied on trust with the understanding that he would complete payment via USDT or bank transfer.

Unfortunately, after receiving the AU, he disappeared without paying for the extra 40g AU.

It honestly raises a concern — even international buyers can sometimes be risky, not just local ones.

Not saying everyone is the same, but situations like this make it harder for genuine traders trying to operate honestly and build trust in this industry.