• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Home
  • About
  • Contact

Marketing Analytics Today

Helping you make sense of digital marketing analytics

  • Intro to Analytics
  • Digital Marketing
  • Social Media
  • Email
  • Free Resources
You are here: Home / Digital Marketing / Analytics Edge Helps Commodities Pros

Analytics Edge Helps Commodities Pros

April 6, 2014 by Sarita Harbour

Commodity Traders Get Analytics Edge
Source: GraphicStock

Commodities professionals have had a rough go of it over the past few years.  Deutsche Bank, JP Morgan Chase & Co.  and Morgan Stanley all slashed commodities trading jobs in 2013, according to Bloomberg.  Weak performance in the power, gas and investor products sectors as well as increased regulatory compliance costs are to blame. However, the news isn’t all bad. In the new era of big data, the information traders need is at their fingertips. Smart commodity professionals are learning to use an analytics edge to make decisions about which companies to trade, as well as to test the effect of potential trades on their portfolios.  As they’ve quickly discovered, while efficiently analyzing data may be the key to their success, the real value lies in the questions the data points to, NOT the answers.

Thanks, Dodd Frank

The Dodd Frank Wall Street Reform and Consumer Protection Act’s strict trade record management rules may be to thank.  The new financial service regulations such as those introduced by the act  mean that record keeping for all financial records and trades are now longer and more detailed, taking more time to complete. However, there’s gold in them thar records – as long as you know where to look.

Analytics edge is in the questions, NOT the answers

And that’s where the analytics edge comes into play.

Rapid advances in technology mean that  more business transactions are happening faster than ever before.  The more detail recorded for each of these transactions, the more information produced to show trends and create forecasts. However, until recently, we just didn’t have the capabilities to process this information fast enough to apply it to trades.

Efficient cloud-based processing applications and cutting-edge analytics programs are changing that. This powerful combination is a godsend for the transaction-heavy commodity trading industry, according to an article in Banking Technology Magazine.  Modeling activities that used to take hours can now occur in a matter of minutes, and may reveal previously overlooked possibilities.  Analytics  allows unlimited iterations of the question  “What if we do this?” to be answered faster than ever before. This gives traders using analytics an edge over their non-analytics-savvy peers.

Analyze This: Commodity Trading Desk Performance

The silver lining for commodities pros grumbling over the detail required by the new Dodd-Frank regulations for each trade is that the detail makes the data more useful.  These records, combined with the lightning fast processing software and powerful analytics programs  generate a clearer picture of  a commodities firm’s performance than ever before.

For example, a commodity trader who wants to model the impact of various trading strategies on the company’s EPS must input relevant and specific data points. These include things like  current trading positions, current and historical settlement, forward pricing, trading volumes, mark-to-market valuations and interest rates. Once the data is there in the form of transactional records, modeling using analytics programs becomes much less time-consuming.

The fruity flavors of these new versions are easy to consume and quick viagra from canada pharmacy to deliver a rock hard-on. In this case they fail to take a pill an hour ago, before the successful copulation. generic cialis australia Thankfully, the health condition is treatable with some useful and canadian viagra pharmacy effective supplements available in the market. This generic version is available at significantly low cost if compared with the branded one. viagra brand Alternatively, evaluating trading department performance by comparing the return on investment (ROI) against internal benchmarks or the ROI of other companies’ trading departments is easier with the combination of big data and analytics.

Since financial firms use large-scale records management systems to handle the massive amounts of data they generate, it’s easy to organize and find the records required for each modeling exercise. Now, with cloud technology, better record keeping and new financial analytics programs,  it takes mere minutes for a model to emerge – a model that can point to the best trading strategy with respect to EPS.

These new insights may lead to bigger profits for commodities trading departments, boosting revenue and share prices of financial institutions that are suffering from increased costs of meeting new regulatory requirements and the volatility of the commodities markets.

Analyze That: Study Commodity Company Behavior

Commodity trading professionals have discovered that the main business goal of a firm is a good starting point in deciding whether to add the business to its book.

Analytics programs lead them down data roads that were once too complex or expensive to pursue. One way traders make use of analytics is to get a clear picture of how well a company’s spending aligns with its business goals.  They do this by using cash forecasting tools and publicly available working capital figures from financial statements.

Commodities traders also rate the logistical efficiency of a company by including publicly available data on transportation costs,  government fees and tariffs, as well as company-specific data on inventory. In the same way that banks use big data and analytics to uncover opportunities for new markets, commodities pros comb through public and private information to uncover new regions, companies, and commodities to invest in.

For analytics programs to work effectively, however, they must focus on specific goals, and most importantly, they must analyze the right information.

Getting to the right data quickly is the key to developing questions that will ultimately lead to more business opportunities. Despite the increased workload that Dodd Frank compliance brings to trading professionals, the improved record keeping may make it easier to find quality data. Additionally, the rapid development of new automated analytics programs is helping to uncover new areas of opportunity for trading firms large and small.

 

Filed Under: Digital Marketing, Finance Pros, Intro to Analytics, SaaS Tagged With: analytics, financial professionals

Primary Sidebar

Categories

Recent Posts

  • 5 Free Beginners Guides to Google Analytics
  • Marketing Small Business on Social Media: 5 Tricks to Try in 2020
  • 7 Free Digital Analytics You Need for 2020
  • 5 Free Social Media Templates for 2020
  • How to Make Sense of Your Pinterest Analytics

Popular Posts

Graphic diagram of digital marketing?
Laptop screen showing pie charts and graphs of analytics
Instagram logos and smartphone showing instagram screen
Tablet and smartphone showing online courses in marketing analytics
Closeup of hands on smartphone and girl working on laptop with social media doodles on the wall behind her.
Laptop and two printables of graphs and analytics reports.

Copyright © 2023 · Magazine Pro on Genesis Framework · WordPress · Log in