What are Professional Commodity Trading Advisors (“CTAs”)?
It’s important to note that the term “Commodity Trading Advisor” originated as a title for managed futures traders long before the industry evolved into markets outside of and exceeding the traditional commodity markets. In today’s environment, CTA’s use futures as an instrument or tool to direct investments across diversified global markets such as metals, energies, interest rates, equities, agriculturals, currencies, commodities and more.
The importance of CTAs is extremely significant. If an unskilled person attempted to practice law or medicine, he or she would probably perform quite poorly, just like many non-professional and unskilled “do it yourself” futures traders. So it comes as no surprise that in the highly complex and challenging field of commodity futures trading, the vast majority of non-professional, amateur traders do lose. In fact, we often hear statistics that as much as 90% of these “do it yourself” futures traders wind up losing. However, more experienced professional Commodity Trading Advisors (“CTAs”) have been shown to achieve substantial, highly attractive returns.
Studies have shown professional Commodity Trading Advisors do experience an appreciably higher success rate than the individual amateur trader. The fact is there are numerous Commodity Trading Advisors with highly attractive returns achieved through prudent money management! You are, however, subject to the risk of loss no matter who is managing your money.
The establishment of global futures exchanges and the accompanying increase in actively traded contract offerings has allowed CTAs to diversify by geography as well as by product. For example, through CTA managed accounts, investors can participate in at least 150 different markets worldwide, including stock indexes, financial instruments, agricultural and tropical products, precious and nonferrous metals, currencies, and energy products. CTAs offer ample opportunity for profit potential and risk reductions among a broad array of non-correlated markets.
There is a risk of loss when trading futures. Futures trading is not appropriate for all investors.