A new breed of tech-driven traders is conquering intraday power markets
As the influx of renewables make intraday markets increasingly complex, Danske Commodities is fusing tech skills like coding and advanced analytics with well-proven trading strategies and market experience. And it’s paying off. Here, Head of Intraday Power Trading Anders Kring explains how upskilling our traders has made Danske Commodities one of the largest and most active players in the competitive intraday market.
Intraday power markets are changing rapidly. Driven by national climate targets, Europe is seeing an influx of renewables, and the short-term physical power market is key to succeeding with the transition to sustainable energy. Why? Because this is where renewable energy is integrated in the energy mix. But integrating renewables in a physical market is no easy task.
More renewables means more volatility
Renewable energy is a highly volatile commodity, simply because we cannot control when the wind blows and the sun shines. When conventional energy production is being phased out and we start to rely more on renewables, market volatility will inevitably increase. Forecasting capabilities and a data-driven trading approach become key and for traders, this means having a full overview of European markets, price data, weather forecasts and much more. Actually, to stay on top of the volatile intraday markets, a trader would have to use hundreds of screens to respond immediately to each market movement. This is just not possible, which is why we have upskilled our traders to handle the new market reality and future-proof their skills.
Meet the tech-driven trader
Intraday markets are not only becoming more volatile. They are also growing in terms of liquidity at high speed, which means many, many more trades. Our traders are now executing thousands of trades each day and to manage that, we are evolving into tech-driven trader hybrids, working shoulder-to-shoulder with quants and software developers, who have also become indispensable on the trading floor. As an example, we have built skills in SQL coding so we can fetch the data ourselves. We have also learned to code in Python and make reports using PowerBI. Ultimately, this means that the traders can now solve complex analytical tasks themselves, which boosts trading results and future-proofs the skills of the traders in a digital world.
Algos are a trader’s best friend
Some of the most powerful weapons available to the tech-driven trader are automated trading solutions. We spotted early on that intraday trading was becoming a volumes game and to stay competitive, it would mean doing more trades and making less mistakes. Enter the trader’s best friend: algos. Algos have made it possible for us to reduce manual errors, eliminate repetitive tasks and free up time for our traders to hone their analytical skills and devise profitable trading strategies. Today, around 75% of our intraday trades are handled by algos, which has enabled our traders to grow the business. In just a year, we more than doubled our monthly traded volumes – and according to EPEX, we are now the second-largest intraday trader by volume.
About Anders Kring
- Position: Head of Intraday Power Trading
- Employed since: July 2018
- Educational background: Master’s in Finance