Commodity Trading Advisor (CTA)
Candlefocus EditorA CTA’s purpose is to provide consultation, advice and execution services on commodities investments. This may include investment strategies, technical analysis, portfolio selection, and other advice. When trading futures and derivatives, CTAs are expected to develop a trading program based on their knowledge of the market and their expertise in financial analysis and risk management.
To be registered as a CTA, the NFA requires a person or entity to fulfill various requirements, such as having a minimum of two years of experience in futures trading and/or relevant analysis, or passing the Series 3 Exam. Additionally, the CTA must be registered with the CFTC, must have a management or skills program approved by the NFA, and must maintain certain records and documents.
CTAs typically charge a “a fee, usually a percent of assets under management or a flat fee. Once a CTA has a strategy in place and trades on behalf of clients, they must also provide periodic account and performance information, as required by the CFTC. Regular reporting also helps ensure adherence to CFTC regulations and NFA rules.
In conclusion, a commodity trading advisor is a professional that helps traders make decisions on investments in commodities and provide access to resources, strategies and knowledge to aid in those decisions. CTA registration requirements include having experience in derivatives trading, passing the Series 3 Exam and maintaining certain documents. CTAs typically charge a fee-based on assets under management, and provide regular account and performance reports.