Behavioral Finance and Energy Trading - BFET 

CPE Credits Awarded: 16
Categories: Oil Industry, Oil Supply and Trading, Global Association of Risk Professionals (GARP) Approved Course

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Free

Gold Course

This workshop provides an introduction to behavioral finance, an exciting area in economics that combines the psychology of risk taking with traditional finance and economics theory of market behavior. Numerous case studies focused on energy and commodity markets are presented to introduce key concepts

The course aims to encourage delegates to raise their level of self-awareness and gain a deeper understanding on how behavioral, psychological and biological aspects condition trading decisions.

We will explore the personality traits of successful traders and the risk taking profiles that are often found in members of different trading groups in energy firms such as asset-based trading, optimization, proprietary trading, marketing operations, portfolio management, risk management and operations.

Prior to the course, delegates have the option to take a survey designed to identify attitudes towards risk and potential psychological biases. Individual results can be kept confidential and discussed in person with each delegate.

 

What you will learn

How to identify and modify behavioral and cognitive biases

  • A survey of latest research on behavioral finance applied to trading
  • Key psychology traits of successful traders
  • How do the body and brain cooperate to take risks
  • Strategies to manage risk and anxiety
  • How to incorporate behavioral aspects to improve trading strategies
  • What type of personality profiles are more likely to be successful at different energy trading strategies
  • Lessons from energy and commodity trading debacles

 

Do you have a question or enquiry regarding this course?

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Asia Pacific Europe, Middle East, Africa, Central & South America North America

GARP rgbThe Oxford Princeton Programme is registered with GARP as an Approved Provider of Continuing Professional Development (CPD) credits. The Oxford Princeton Programme has determined that this program qualifies for 16 GARP CPD credit hours. If you are a Certified FRM or ERP, please record this activity in your Credit Tracker at http://www.garp.org/cpd

The course teaches a disciplined approach to asset-based oil trading. This is an intermediate course designed for oil traders as well as those interested in learning more about asset-based trading strategies such as trading analysts, schedulers and risk managers. Basic knowledge of physical asset trading strategies such as cargo arbitrage and storage is required.

Delegates are expected to be familiar with basic fundamental as well as technical analysis tools.

  • Crude Oil Traders
  • Products Traders
  • Trading Managers
  • Trading Analysts and Schedulers
  • Market and Credit risk managers
  • Trading and risk consultants

Day I

Trading psychology 

101: Behavioral Finance and Energy Trading (I)

  • The ‘Financialization’ of Energy Markets
  • Theories of market behavior: Efficient markets vs. Adaptive Market Hypothesis
  • Overview of a disciplined Approach to Trading (I): Edge, Process and Time
  • How do Trading Rooms make money
  • Hedging vs. Speculation. Drawing the line between them.
  • Case study: Why Traders Blow Up?: Concentrated positions, markets freezing up, lack of risk control
  • Forensic finance: Lessons from Metallgesselchaft, Enron, Amaranth, Ospraie Capital 

102: Behavioral Finance and Energy Trading (II)

  • A framework for understanding trader psychology
  • Overview of Behavioral and Cognitive biases
    • Risk Aversion
    • Overconfidence
    • Persuasion and hindsight effects
    • Information biases
    • Groupthink
    • Regret and Fear of Missing Out
  • Case study: Billionaires and insider trading. Why risk it all?
  • Case study: Identifying and correcting biases

103: The Psychology of Trading

  • What makes a good trader? Lessons from interviews with successful traders
  • Cardinal sins of trading
  • Regret and fear of missing out
  • Dealing with stress and anxiety
  • Perfectionism and ego

104: Energy Trading Strategies and Trader Profiles

  • Risk taking attitudes and energy trading operations
  • Supply balancing
  • Energy marketing
  • Asset-based trading
  • Portfolio optimization
  • Proprietary trading

105: Review and Discussion of Trading psychology survey:

  • Benchmark analysis and review of main findings
  • Discussion


Day II

201: A disciplined Approach to Trading:

  • Edge
    • Do you know your edge?
    • How much edge do you need to succeed in trading?
  • Process
    • The importance of discipline
    • Why good strategies will sometimes perform poorly
  • Time
    • Is trading a loser’s game?
    • Strategies for managing downside risk

202: Behavioral Finance and the Biology of Risk Taking

  • Biology of risk taking
  • How do the body and brain cooperate to take risks
  • Gut feelings and decision making
  • The role of pre-consciousness vs. consciousness
  • Case study: Should traders be trained as athletes?
  • Do trader’s Sharpe ratios improve with experience?
  • Case study: The hour between the dog and wolf

203: Trading Methods and Traders

  • Trading styles, trading methods and market regimes
  • Technical Indicators and market psychology
  • Fundamentals vs. technical
  • Key traits of successful traders

204: Trading Discipline

  • Components of a trading plan
  • How should I prepare to trade?
  • Entry and exit rules
  • Why should I enter into a position?
  • Position sizing, limits and risk levels
  • Liquidation strategies and market liquidity

Faculty

Chris Mammarelli and Carlos Blanco

Testimonials

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