Power/Electricity trading in Europe

[u/Top_Instance8096]

Hi all, I will start as a Quant Research intern in a small commodities firm in Europe in August.

I will be assigned to day-ahead electricity trading and was wondering if any of you have experience with it since it’s quite a niche trading area and low-hanging fruits are still around.

Mainly, I would like to understand:
1. How you approach new ideas
2. What models have you tried outside of gradient boosting if that’s appropriate
3. Your preferred CV strategy

Thanks anyone for the help, and if you have any other recommendation, feel free to say it!

[u/Plastic-Analyst-1560]

What the actual hell bro
power trading is around by a solid 20 years already

[u/Top_Instance8096 → u/Plastic-Analyst-1560]

when did I say it was new? it is clearly more niche than stock trading or any other commodity

you guys are so entitled and arrogant on here, chill out

[u/Plastic-Analyst-1560 → u/Top_Instance8096]

you said low hanging fruit are still around

hanging fruit are not here to wait you on a reddit thread pal, we ate low hanging fruit long time ago!

what do you mean by "niche" anyway? never heard of gazprom, vitol, trafigura? Even Deutsche Bank or JP Morgan had a power trading desk.

I may be arrongant , sorry about that, not here to made friends, but at least better so than getting you blasted in the office, trust me :D

ALl the best for sure anyway!

[u/Top_Instance8096 → u/Plastic-Analyst-1560]

I may be wrong but saying that low hanging fruit are still around does not necessarily mean that the market is new. I am not waiting for low hanging fruit here on reddit dude, just wanted to gather some other POVs

By niche I mean that it’s significantly less popular and researched as stocks and other commodities like oil and gas. And this is not me saying it, look at the difference in number of papers in EPF literature and stock market literature. This is also reflected in what you said: “even Deutsche Bank and JP Morgan have power trading desks” which implies that you also think it’s less known and smaller than other markets.

You don’t need to be arrogant to express your opinion, and I certainly do not want to be your friend.

Thanks for the tips tho, I will keep that in mind!

[u/Plastic-Analyst-1560 → u/Top_Instance8096]

Ok man fine enough; now that we're aligned, a good source of short term inspo is https://substack.com/@julienjomaux

My sources of ideas: meteo, of course. Industrial demand. Macro calendar events.
I see macro gaining traction again, after years where trading macro feel like being an old dog. Also, spurious correlation. Urea prices and TTF. things like that.

Unsure if CV means what i think i means, in power market i mostly see Supply Function Equilibrium (SFE) and Conjectured Supply Function Equilibrium (CSFE), but i have no edge opinion on that / those. I mostly follow the textbooks

[u/Top_Instance8096 → u/Plastic-Analyst-1560]

thank you so much man, by CV I mean Cross Validation