How to become an Oil Trader explained by ForexSQ financial experts, If you want to trade oil online and make money from home then you should read this article to know how to be an Oil trader in Singapore, UK, South Africa, Europe, Australia, Asia, U.S. and all other countries.
How To Be An Oil Trader
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Liren Pan tried to keep quiet while typing away at his laptop computer last week in the library of Washington University. After finishing up a statistics exam, the 26-year old business student was vying to win a simulated oil futures trading competition on which his future career could depend.
“I want to become an energy trader after I graduate,” says Pan, who will rejoin the work world in 2011.
It’s a controversial career move, considering that oil traders, in particular oil speculators, have been cast as public enemies for allegedly driving up the cost of fuel. Now, through his trading competition, a university professor is attempting to launch a new generation into the occupation.
Eighty-four students on 21 teams spread among 13 schools are currently competing in a mock crude oil and natural gas futures trading market in a simulation, the first part of which will conclude Oct. 23. The top seven teams, with up to 28 students in all, will then meet in November. On the line: Coveted internships with energy and trading companies.
The real kicker: Those who make the most money may not emerge victorious. That’s because the rivalry is not about raw speculation; it’s about risk management, says the man in charge of the contest, Tulane University professor Joseph LeBlanc. He spent 25 years in the oil and gas industry, 15 of them either trading or overseeing traders.
The participating students come from schools ranging from Penn State to the University of Chicago. Many of the undergraduates and graduate students are members of campus energy and finance clubs. This month they’re being judged daily on their performance, using a volatility methodology known as the ulcer index, which balances their returns against the risks they incur. The scoring system is skewed so that any losses count against students, even if they’re temporary and quickly reversed.
“These oil companies don’t want to hire riverboat gamblers,” says Leo Murphy, university relations program manager of Trading Technologies, which has the provided students with the same software professional energy traders use. For research and charting, students are using a professional product from Thomson Reuters.
The final seven teams will meet at Tulane University in next month. There, they will address a panel of judges, describing their strategies, such as whether they intend to hold intra-day or day-long positions.
Then they will spend four hours on a Saturday in simulated trading markets. During this round, each student will compete as an individual. When the trading is over, they will meet the judges again to discuss their results and how closely they stuck to their stated strategies.
Companies planning to send judges include IG, CMC markets, ConocoPhillips , FxPro, Citigroup , TXU , Entergy , Shell Trading at Royal Dutch Shell and the proprietary trading firm Geneva Trading.
LeBlanc says the risk-adjusted results are part of what makes this contest different from those in which students compete in mock markets (At the University of Toronto, for example, students are ranked solely on the basis of how much (pretend) money they make.)
Even so, there are some inevitable differences from a live trading floor. Traders in training are unlikely to even consider doing something reckless when they’re being so closely watched and graded. Nor will they dabble in algorithms, which make up an increasing proportion of trading volume. The competition is also limited to highly liquid listed products, like oil futures, rather than over-the-counter energy derivatives, like swaps.
LeBlanc says his main mission isn’t to mimic reality but to drive home to would-be energy traders the fact that prospective employers are not looking to hire speculators, but people who can reduce their risk.
“I’ve been around people who were gunslingers,” LeBlanc says, “and management would say ‘That’s too much risk.’”
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