This article delves into the raw reality of running a niche commodity trading business and the challenges that come with it. The author shares his personal experience and background, highlighting the importance of two character traits for success: extreme competitiveness and obsessiveness.
Commodity trading is a low margin business that requires leveraging other people’s money to scale up one’s activity. While this can lead to significant profits, it also comes with a high level of risk and stress. The author emphasizes the need for effective risk management in trading, as well as the operational challenges that come with managing physical commodities. The article provides insight into the health impacts of trading stress and the thrills and pains of commodity trading.
Gaming Background
The speaker in the video shared his personal experience with playing online games, specifically the first ever MMO RPG called Ultima Online and a trading card game called A Game of Thrones. He mentioned that he became obsessed with both games and spent countless hours playing them. He even won multiple tournaments and the European Championship for A Game of Thrones.
The speaker believes that having a competitive nature and being extremely obsessive are two important character traits for running a niche commodity trading business. He explained that managing risk is a crucial aspect of this type of business, and it can be quite stressful and painful. Commodity trading is a low-margin business, and borrowing money from others is necessary to scale the business. However, this also increases the level of stress as the business owner is responsible for managing the risk with someone else’s money.
The speaker emphasized that running a niche commodity trading business can be a challenging career path, but it can also be rewarding. The business owner gets to travel and meet interesting people, but it comes with a cost of pain and stress. Ultimately, the success of the business depends on the owner’s ability to manage risk and handle the challenges that come with it.
Character Traits for Success
Running a niche commodity trading business is a challenging task that requires a particular set of character traits to succeed. As per the speaker’s experience, two essential character traits are crucial for success in this field.
The first trait is an intense desire to win. The speaker emphasizes that being highly competitive is a prerequisite for running a successful commodity trading business. Without an insatiable hunger for victory, the speaker believes that an individual may struggle to cope with the pain and challenges that come with running a niche commodity trading business.
The second trait that the speaker considers crucial is being obsessive. According to the speaker, being extremely obsessive is a necessary quality for anyone seeking to excel in the commodity trading business. The speaker draws a parallel between his childhood obsession with online games and his current success in the commodity trading business. He believes that the same level of dedication and repetition that he displayed as a child is required to achieve success in this field.
The speaker acknowledges that running a niche commodity trading business is a painful and challenging endeavor. The business involves managing various risks such as market risk, counterparty risk, and geopolitical risk. Managing these risks is crucial to the success of the business and requires a lot of effort and expertise.
Furthermore, the speaker notes that commodity trading is a low-margin business. To make a good amount of money, traders must leverage their activities by borrowing money from other people. This aspect of the business can be stressful and painful for business owners as they have to manage risks with someone else’s money. The speaker points out that this can be particularly challenging if something goes wrong, and they end up losing the borrowed money.
The speaker emphasizes that the commodity trading business is unpredictable, and anything can happen. They note that operations can be challenging to manage, especially when dealing with a lot of cargo. Strikes, wars, and other unforeseen events can also impact the business. As a result, the speaker notes that commodity trading business owners have to deal with a lot of stress, which can have negative effects on their health.
In conclusion, running a niche commodity trading business requires specific character traits, including an intense desire to win and being obsessive. While the business can be rewarding, it comes with its fair share of challenges and pain. Business owners must be prepared to manage risks, deal with stress, and be resilient in the face of adversity.
The Raw Reality of Commodity Trading
Commodity trading is a challenging business that involves managing various types of risks, including market risk, counterparty risk, and geopolitical risk. The ability to manage these risks effectively determines whether a commodity trader will make money or not. In today’s world, simply connecting two counterparties together is worth zero value. Therefore, commodity traders must bring all the risk upon themselves to add value to the marketplace.
Physical commodity trading is a low-margin business, which means that traders cannot rely solely on their own equity to make a good amount of money. They need to borrow money from other people to leverage their activity. This can be stressful and painful for business owners as they are managing the risk with someone else’s money. If something goes wrong with a cargo or a deal, it can be a lot to bear, especially if they have borrowed money from family or friends.
Commodity markets are quite unpredictable, and a deal that goes well in a bear market can completely go to the sheet if it switches to a bull market. Therefore, traders must be able to cover all the risks and use proper instruments to cover most of them. However, the world is quite unpredictable, and a lot of things could go wrong. Operations are also quite challenging to manage, and anything can happen with a lot of quantity, cars at port, warehouses, trucks, and so on.
Despite the challenges, commodity trading can be a thrilling life, and successful commodity traders travel a lot and meet many interesting people. However, there is a cost to pay, and the cost is pain. Most commodity traders have a baseline of stress that they cannot get rid of because they know anything could happen. The stress can cause health issues down the line, and most traders have cardiac problems, and 80% of it is because of the stress.
In conclusion, commodity trading is a challenging and difficult career, but it can also be one of the best. Traders must have a competitive spirit and be extremely obsessive to succeed in this environment. If they can manage the risks and get rid of the pain, they can live an incredible life. However, like everything in life, there is a trade-off, and commodity trading has its cost.
Risk Management in Trading
Running a niche commodity trading business is a difficult endeavor that requires a high level of risk management. As a commodity trader, one must manage market risk, counterparty risk, geopolitical risk, and more. The ability to manage these risks is what determines whether a trader will make money or not. Without managing these risks, the value of a trading firm is zero.
Commodity trading is a low-margin business, which means that traders cannot solely rely on their own equity to make significant profits. Instead, they must borrow money from others to leverage their activities. This can be stressful and painful for business owners, as they are managing risks with someone else’s money. If something goes wrong, such as a cargo being lost or a deal falling through, the trader must bear the burden of losing someone else’s money.
Managing operations is also challenging, especially when dealing with large quantities of commodities in ports, warehouses, and trucks. Strikes, wars, mistakes by team members, and bad contracts can all cause problems for traders. Although traders can use instruments to cover most of these risks, the world is unpredictable, and anything can happen.
The stress of managing these risks can take a toll on traders’ health. Many traders suffer from cardiac problems and other health issues due to the high levels of stress. Despite the challenges, running a successful commodity trading business can be rewarding. Traders get to travel, meet interesting people, and live a thrilling life. However, the cost of this lifestyle is pain, both physical and emotional.
In conclusion, running a niche commodity trading business is not for everyone. It requires a competitive and obsessive personality, along with a high level of risk management skills. Although it can be rewarding, it comes with a significant amount of pain and stress. However, for those who can manage the risks and handle the stress, it can be a fulfilling and exciting career.
Understanding Low Margin Business
Commodity trading is a low margin business, which means that in order to make a significant amount of money, one must leverage their activity by borrowing money from other people. As the value of the shipment increases, more money is needed to be borrowed, but the margins remain the same. This is why borrowing money is crucial to scaling the business and making real life-changing money.
However, managing risk is the key to making money in a commodity trading business. Commodity traders are responsible for managing market risk, counterparty risk, geopolitical risk, and more. Without the ability to manage risk effectively, a trading firm would add no value to the marketplace. This is why commodity traders must take on the risk themselves, as suppliers and users would simply come together and trade without them.
The physical nature of commodity trading also adds to the difficulty of managing risk. Operations are difficult to manage when dealing with large quantities of cargo in ports, warehouses, and trucks. Strikes, wars, and other unpredictable events can also impact the business. Although insurance can mitigate some of these risks, there is always a cloud of risk upon the business owner.
As a result, running a niche commodity trading business can be very stressful and painful. The business owner must constantly manage risk with borrowed money, and any mistake could result in significant losses. The unpredictability of the market and the physical nature of the business add to the stress level, which can lead to health issues down the line. However, if the business owner can manage the risks effectively, the rewards can be significant.
The Stress of Using Borrowed Capital
Commodity trading is a low margin business, which means that in order to make significant profits, traders need to use borrowed capital to leverage their activities. This can be a source of significant stress for business owners, as they are managing risk with someone else’s money.
The added value of a trading firm lies in its ability to manage market risk, counterparty risk, geopolitical risk, and more. Without this risk management, suppliers and users would simply come together and trade by themselves, rendering the trading firm’s services useless.
However, managing risk with borrowed capital is not an easy task. Markets are unpredictable, and deals that may go well in a bear market can quickly turn sour in a bull market. Furthermore, operations can be difficult to manage, with a lot of quantity, cargo, warehouses, trucks, and more. Anything can happen, from strikes to war, and even the slightest mistake can have disastrous consequences.
The stress of managing risk with borrowed capital can be overwhelming, and many commodity trading business owners experience a significant amount of stress as a result. This stress can lead to health issues down the line, with many traders experiencing cardiac problems and other health issues.
Despite the stress and pain that comes with running a niche commodity trading business, it can also be an incredibly rewarding career. Business owners have the opportunity to travel, meet interesting people, and live a thrilling life. However, there is always a cost to pay, and in this case, it is the stress and pain that come with managing risk with borrowed capital.
Overall, managing risk with borrowed capital is a challenging task that requires a significant amount of skill, knowledge, and expertise. While it can be a source of stress and pain, it can also be an incredibly rewarding career for those who are willing to take on the challenge.
Market Volatility and Unpredictability
Commodity trading is a low margin business that involves managing various risks such as market risk, counterparty risk, and geopolitical risk. The ability to manage these risks effectively determines whether a trading firm will make a profit or not. Without risk, suppliers and users can come together and trade without the need for a trading firm.
However, managing these risks can be challenging and stressful, especially when using borrowed money to leverage activities. In a low margin business, borrowing money is necessary to make significant profits. For instance, if a shipment is worth $100k and has a 5% margin, the trader can net $5,000. But if the shipment is worth $1 million, the trader needs more money to make the same profit.
Market volatility and unpredictability can also pose challenges to commodity trading. A deal that goes well in a bear market can completely fail in a bull market. Markets are quite unpredictable, and a lot of things can go wrong. The operations of commodity trading are also difficult to manage, especially when dealing with a lot of cargo at ports, warehouses, and trucks.
Additionally, anything can happen in the world, such as strikes, wars, and natural disasters, which can affect commodity trading. Although traders have insurance against most of these risks, mistakes can still happen. A lot of things could go wrong, and ultimately, the business owner has to bear the risk.
The stress of managing these risks can take a toll on the business owner’s health, with many experiencing cardiac problems and other health issues. However, if the risks are managed effectively, commodity trading can be a thrilling and exciting career, with traders traveling and meeting interesting people.
In conclusion, managing a niche commodity trading business involves managing various risks and dealing with market volatility and unpredictability. Although it can be a challenging and stressful career, it can also be rewarding and exciting if the risks are managed effectively.
Operational Challenges
Running a niche commodity trading business is a challenging task that comes with a lot of pain. Commodity trading businesses manage market risk, counterparty risk, geopolitical risk, and more to add value to the marketplace. The ability to manage these risks will determine whether or not a trading firm will make money. Without risk, suppliers and users would come together and trade by themselves, rendering the trading firm’s role useless.
One of the most important things to understand is that commodity trading is a low-margin business. To make good money, traders cannot just use their own equity; they need to borrow money from other people, which can be quite stressful and painful for business owners. Managing risk with someone else’s money is a lot to bear, especially if something goes wrong with a cargo or deal. Markets are unpredictable, and a deal that goes well in a bear market can completely go south if the market switches to a bull market. This unpredictability is what makes the job of a commodity trader extremely stressful.
Operations are also quite difficult to manage, especially when there is a lot of quantity and a lot of cargo at ports, warehouses, and trucks. Anything can happen, from strikes to war, and while there are insurances against most of these things, there is always a risk that something could go wrong. Traders need to cover all these risks and use proper instruments to cover most of them, but the world is still quite unpredictable, and a lot of things could go wrong.
Ultimately, the job of a commodity trader is to manage risk and make sure that everything runs smoothly. However, the stress that comes with the job is not easy to handle, and it can take a toll on a trader’s health. Many traders have suffered from health issues down the line because of the stress, and it is not uncommon for traders to have cardiac problems. The stress is a constant cloud that hangs over the business owner, and it is not easy to get rid of.
Despite all the pain and stress that come with running a niche commodity trading business, it can be an incredible life if managed well. Traders get to travel a lot, meet interesting people, and have a thrilling life compared to their white-collar friends who work in banks or law firms. However, there is always a cost to pay, and in the case of commodity trading, the cost is pain.
Health Impacts of Trading Stress
Commodity trading is a challenging business that requires a lot of dedication, hard work, and risk-taking. Managing risk is the key to success in this business, and it can be quite stressful. The stress of managing risk with borrowed money can take a toll on the health of business owners.
Physical commodity trading is a low-margin business, which means that traders have to borrow money to scale their activities. This can be extremely stressful because they are managing risk with someone else’s money. If something goes wrong, they have to bear the burden of losing someone else’s money.
The unpredictability of the market and changes in geopolitical situations can also add to the stress levels of commodity traders. Even with proper risk management instruments, there is always a cloud of risk hanging over the business owner.
The stress of commodity trading can have serious health impacts. Many traders have reported cardiac problems and other health issues due to stress. The stress can also affect their personal lives and relationships.
Despite the challenges and stress, running a successful commodity trading business can be rewarding. It offers a thrilling life full of travel and meeting interesting people. However, there is a cost to pay, and that cost is pain.
In conclusion, commodity trading is a tough business that requires a lot of dedication, hard work, and risk-taking. Managing risk with borrowed money can be extremely stressful and can have serious health impacts. However, for those who can manage the stress, it can be a rewarding career.
The Thrills and Pains of Commodity Trading
Commodity trading can be an exciting and lucrative business, but it also comes with its fair share of challenges and risks. As a commodity trader, managing market risk, counterparty risk, and geopolitical risk is essential to making a profit. The ability to manage risk effectively is what sets successful trading firms apart from those that fail.
One of the biggest challenges of commodity trading is the low margin business. To make a significant profit, traders often need to borrow money from other people to leverage their activity. This can be stressful and painful for business owners as they are managing risk with someone else’s money. If something goes wrong with a shipment or deal, the trader could potentially lose someone else’s money, which can be difficult to bear.
In addition to financial risks, commodity trading also involves managing operations, which can be quite difficult. With a lot of quantity, cargo at ports, warehouses, and trucks, anything can happen, from strikes to war, mistakes from the team, or a counterparty not having a good contract. These risks can cause a lot of stress for business owners, and they must ensure they cover all the risks and use proper instruments to cover most of them.
The unpredictable nature of commodity markets adds to the stress of commodity traders. A deal that goes well in a bear market can completely fall apart if it switches to a bull market. Markets are quite trendy, and they usually go in the same direction for a long time, but no one has a crystal ball to predict the future. This unpredictability can cause a lot of stress and anxiety for traders, and it is not uncommon for traders to experience health issues down the line due to stress.
Despite the challenges and risks, commodity trading can be an incredibly rewarding career for those who are competitive and obsessive. Successful commodity traders travel a lot, meet interesting people, and have a thrilling life compared to those who work white-collar jobs. However, the cost of this thrilling life is pain, stress, and anxiety.
In conclusion, commodity trading is a challenging and risky business that requires a lot of skill, knowledge, and determination to succeed. While the rewards can be great, the pain that comes with it cannot be ignored. Successful commodity traders must be able to manage risks effectively, borrow money to leverage their activity, and deal with the unpredictable nature of commodity markets.
Conclusion
Running a niche commodity trading business comes with both rewards and challenges. The ability to manage risk is crucial in determining whether a trading firm will make a profit or not. Physical commodity trading is a low margin business, which means that leveraging other people’s money is necessary to make significant profits. However, this can also be stressful and painful for business owners, as they have to manage the risk with someone else’s money.
Operations can also be difficult to manage, with unpredictable markets and unforeseen events such as strikes and wars. The stress associated with running a commodity trading business can take a toll on a person’s health, with some experiencing cardiac problems due to the stress.
Despite the challenges, running a successful commodity trading business can be incredibly rewarding, with opportunities to travel and meet interesting people. However, it is important to note that there is a cost to pay, and that cost is pain.
In summary, running a niche commodity trading business requires a competitive drive and an obsessive personality. Managing risk, leveraging other people’s money, and dealing with unpredictable markets and events are all part of the job. While the rewards can be significant, there is also a significant amount of pain associated with the job.