Energy Trader

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Energy often seems like an intangible thing. You can't keep it in a bottle; you can't see it, only the evidence that it's there. But just because it isn't visible doesn't mean that it isn't valuable. And the resources from which we create energy are just as valuable as the energy themselves. Without those resources, we wouldn't be able to get energy. That's why resources such as crude oil and ethanol are publicly traded commodities that can be bought and sold just like gold, silver, and other commodities. An energy trader is someone who deals in energy commodities for profit, the way some people deal in stocks or bonds. In order to get involved in energy trading, you'll need to have a pretty wide range of knowledge and skills.

As with any trading-related career, you'll need a sound knowledge of economics and finance if you want to succeed as an energy trader. You'll need to learn how to make trades and how to read the markets. You'll need to learn when to sit on your shares and when to sell. The principles of sell high, buy low apply in the commodities markets as well. And you'll need to learn as much as you can regarding the law that governs commodities trading so that you do all of your trading within the confines of the law.

You must also have a basic knowledge of the commodities that you plan to trade: WTI crude oil, Brent crude, ethanol, natural gas, heating oil, Gulf Coast gasoline, reformulated gasoline blendstock for oxygen blending (RBOB gasoline), and propane. You'll need to know what they're used for and what could affect the prices of these commodities. For example, a particularly cold winter could drive up the price of heating oil. That would be a good time to sell. But a warm winter might bring the price down. That would be a good time to buy.

Whether you have a background in economics or chemical engineering, you'll need to have capital in order to invest in the first place. Since most aspiring energy traders aren't heirs to large fortunes, this means that they either have to get hired by a brokerage or convince people to invest with them. Getting clients to trust you enough to invest with you can often be the most difficult part of the process, especially if you are just starting out as a rookie energy trader. It might be a good idea for you to try to work for a trading firm first, even if that firm doesn't specialize in energy commodities, just so that you can build up some experience and enhance your resume.

Once you get a few years of experience under your belt, you'll be ready to hit the world of energy trading in full force, either by moving up in your firm or by forming your own firm. As long as you have a solid foundation of knowledge of economics and the science of the commodities you're trading, you should be able to build on that with experience until you have a solid business running for yourself; hopefully, one that's as profitable as it is fulfilling.

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