Selecting a Commodity Trading Advisor | Trading Tips


If you are trading products through a managed account, you must select a trading advisor commodity (CTA). A CTA is a securities professional who is licensed by the Regulatory Authority for the Financial Industry (FINRA) and the National Futures Association (NFA) to provide advice on commodities and to accept compensation for investment services and management .

Here are some important questions to ask when you are looking for a qualified CTA:

  • How many years of experience in the market you have?
  • What is your record of performance over the long term?
  • What is your trading strategy and not square with your investment goals?
  • Do you have any complaint against him? (This information is publicly available through the NFA.)
  • How many accounts you currently manage? If the number seems high, your account may not be a high priority for him.
  • Do you have a criminal record? If so, find out details of the arrests or convictions. This information is also available through the NFA.
  • Before selecting a CTA, perform a thorough background check. A CTA is required to register with the NFA exchange with the public. You can discover a lot about a CTA, visit the Web site of the NFA.

After conducting due diligence on the CTA and are comfortable with it, youâ € ™ re ready to deliver him trade privileges. How do you do that? You sign a power of attorney document, which gives complete discretion CTA trade and complete control over the buying and selling of commodities on their own. That means making all the decisions, and you have to live with them.

The main benefit of the managed account is that you get a trained professional to manage their investments. The downside is you can not € ™ t blame anyone but yourself if you incur losses.