Managed Futures Trading Accounts from CTAs

Jan 4 17:15 2009 Praveen Ortec Print This Article

Manage futures trading accounts are a great way to profit from futures markets; especially for those who lack trading knowledge. But there are many things to know first. Which are discussed here.

Managed futures trading accounts help peoples with lesser trading/investing knowledge to profit from futures. Managed futures trading accounts are futures contracts trading accounts which are managed by professional money managers known as Commodity Trading Advisers (CTAs). CTAs trade futures contracts on behalf of their clients. They should be registered under CTFC (Commodity Futures Trading Commission). In return of their services,Guest Posting CTAs charge fees, which usually include account management fee and/or performance incentive (a fixed portion of profit).

There are now a range of managed futures trading accounts to choose from. There are accounts which trade single type of futures contracts (metal futures, equity futures, index futures, currency futures, commodity futures, etc). There are also accounts which trade multiple types of futures contracts and thus insuring diversification of investment and risk. There are strategies for proofing from upward, downward and sidewise price movements. Some CTAs look for short-term short term profits while others look for long-term profits. Most CTAs trade futures contracts based on a pre-determined plan.

There are two different types of commodity trading advisors 1) Discretionary CTAs who are like professional traders; make trading decisions based on fundamental and technical analysis. 2) Systematic CTAs who use advanced trading systems delivering automated trading systems to trade the markets. CTAs can be trend followers who profit from bullish and bearish movements, market neutral traders who wrote options for profit, can be range traders who buy at one level and sell at another level or arbitrators who look to profit from pricing differences of contracts at different markets.

There are many advantages of trading futures contracts through managed trading accounts. 1) They need less investing knowledge, 2) they are managed by professional traders/money managers, 3) they are an easy way to diversify portfolio, 4) like futures they can be used for hedging portfolio risks and 5) they usually have reduced capital and account requirements than a normal trading accounts. The disadvantages include higher fees involved and counter party risk.

For profiting from a managed futures trading account, finding and trading with the right CTA is very important. There are many things to be considered when choosing a commodity trading advisor such as their trading experience, performance history, the products traded through the account, minimum account requirements, fees involved, trading strategies followed, their trading plan, risk adjusted return and annualized rate of return. You must also check your risk tolerance, risk-free capital in-hand and your investing knowledge before making any decision.

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Praveen Ortec
Praveen Ortec

NobleTrading is an online futures trading broker who offer trading access to 3 major futures exchanges for over 50 electronically trading contracts. Get valuable trading insights on trading all financial instrument from NobleTrading’s daily updated online trading blog.

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