How has the role of a gasoline trader changed during the last few years?
LB: The role of a gasoline trader has changed significantly over the course of the last few years as the market has continued to evolve. Traditionally, traders have relied heavily on their relationships to develop their business. This, in conjunction with research and business analysts who would provide the relevant data, were the core of their activities.
Now, we are beginning to see businesses developing in-house platforms to assess vessel tracking data, production levels of countries and refinery turnaround data in one place. Having a single source enabling a trader to access data being supplied by various parts of the organisation will allow them to gain an edge on decision-making in real time. Naturally, this is not something that every organisation will be able to invest into, so having access to this information from an external source will allow traders to accelerate their decision making. Having a source of streamlined information at your disposal to paint a holistic picture of the market is crucial as gasoline traders in particular have to consider a broader range of topics such as blends of numerous products.
What skillsets should gasoline traders have today?
LB: One of the key elements for a trader to be successful in today’s market is the willingness to embrace technology. We operate in an industry that has proven to be inherently slow to embrace change when compared to other markets. While hedge funds have been leading the digital transformation, we are slowly witnessing trading houses follow suit. As the level of sophistication in commodity trading technology increases, traders will no longer need to be as deeply familiar with the pricing of gasoline as previously was the case. However, the ability to have an open mind and develop relationships is still a necessary skillset for traders. Different geographies adapt to change at a different pace and in developing economies, relationships continue to be at the core of most businesses.
Do you believe oil trading is more data focused? If yes, how do digital technologies give an edge to oil traders?
LB: I believe that some markets are quicker to change than others and gasoline has always been one of the more advanced when it comes to data. Information is key when it comes to trading and the quicker you can access this information, the quicker you can make a decision. Typically, information has been fed to traders via a number of sources such as operations and analytics and traders will need to speak to each of these separately and wait for their respective responses. With the development of technology, if you can tap into this data real time you can use this to your advantage to react to the market more quickly and in a more informed manner.
What advice would you give to someone who wants to pursue a career as a trader? What do companies look for when hiring a trader?
LB: The path to becoming a trader typically starts in one of two ways – either by taking the fundamental/quantitative analytics track or via the operations route. These two roles will provide each trader with a different set of skills which is why you will often see a trading bench that consists of individuals coming up via both of these paths. For someone pursuing a role in derivatives trading, the ideal individual will have come from a strong statistical background and have the ability to code in Python as a minimum.
We have also witnessed the rise in the ‘quantamental analyst’ who is able to pair quantitative approaches with fundamental analysis. The common theme here is that technology is crucial to having a competitive edge; however, we cannot disregard the softer skillsets needed to be successful. To make the progression into a trading role, technical understanding will only get you so far. Being able to effectively communicate and defend your ideas to the trading bench and develop strong interpersonal relationships are critical. At the end of the day, this is still a relationship driven market and being adaptable while possessing the emotional intelligence required to develop and maintain key internal and external relationships is incredibly important.