How can individual traders compete with large trading houses?

[F430]

"Any trader that has inside knowledge of physical information is at an advantage when trading commodities. If you don't have access to that information then it's better to not choose those games unless you are purely trading a stat arb type strat. I am talking about traders that work for companies who are producers, refiners and own storage/pipeline/vessels."

This is more what I was getting at. The Nobles, Trafigura, and Glencores of the industry have a ton more resources, software, real-time market information that are simply too expensive for individual traders here to pay for. In Power, it is pretty much a requirement to have at least a few types of Real-Time data subscription services that cost over $100k. I just don't understand how individuals can compete when they have much less resources and access to fundamental market moving information like these large institutions do.

 

[endicottsteel]

"Any trader that has inside knowledge of physical information is at an advantage when trading commodities. If you don't have access to that information then it's better to not choose those games unless you are purely trading a stat arb type strat. I am talking about traders that work for companies who are producers, refiners and own storage/pipeline/vessels."

This is more what I was getting at. The Nobles, Trafigura, and Glencores of the industry have a ton more resources, software, real-time market information that are simply too expensive for individual traders here to pay for. In Power, it is pretty much a requirement to have at least a few types of Real-Time data subscription services that cost over $100k. I just don't understand how individuals can compete when they have much less resources and access to fundamental market moving information like these large institutions do.

yes. the key for me is not to compete where you have no edge. much better to trade based on stat arb concepts or correlations. like everything there is no easy money, only the most disciplined/hardest working will bank. just my 2c.

 

[bone]

"Any trader that has inside knowledge of physical information is at an advantage when trading commodities. If you don't have access to that information then it's better to not choose those games unless you are purely trading a stat arb type strat. I am talking about traders that work for companies who are producers, refiners and own storage/pipeline/vessels."

This is more what I was getting at. The Nobles, Trafigura, and Glencores of the industry have a ton more resources, software, real-time market information that are simply too expensive for individual traders here to pay for. In Power, it is pretty much a requirement to have at least a few types of Real-Time data subscription services that cost over $100k. I just don't understand how individuals can compete when they have much less resources and access to fundamental market moving information like these large institutions do.

Not too many ET members can trade PJM-W or Ercot swaps or the Inc-Dec market, but your point about Power is valid.

Having said that, plenty of commercials are active in exchange traded futures, and if they are accumulating positions those activities are definitely reflected in price action. There are plenty of very successful funds and individual traders who strictly use price data. Based upon my own commercial energy trading experience, I can tell you that our desk did not allow a market to remain "mispriced" for long.