Notes

The Role Of A CTA, Commodity Trading Advisor




Today's Commodity Trading Advisor is no longer to be thought of only as a Portfolio Manager. my site As investment products have become more complex, his role has grown considerably.



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Commodity Trading Advisor at Genuine Trading Solutions is a CTA registered with the CFTC. He says that the role of a CTA today is always changing.


Dwayne Strochen, the President of Genuine Trading Solutions, says that a Commodity Trading Advisor used to be satisfied with being known as a portfolio manager trading commodities and futures in a managed fund. There is no question today's investor has become more sophisticated. In response, today's selection of investment products has become ever more complex and varied, the need for the CTA to understand the uses and management of these products becomes even more acute.


So what exactly is the role of today's Commodity Trading Advisor. Certainly trading of derivative products for a managed futures fund continues to be as important as before. CTAs are also more involved in derivative analytics. This role is focused on becoming an analyst who can structure and analyze more complex requirements from hedge funds, pensions funds and structured products.


In order to preserve asset growth, it is crucial to use derivative analytics in order manage adverse risks of a bond or equity portfolio that are brought on by adverse market conditions. Hedging is a proven way to reduce volatility. The largest institutions have known this for years, but now it's available to smaller companies and individual investors. No doubt as products continue to evolve so too will the CTA evolve to meet the need of today's professional money manager.


Derivative products are no longer limited to exchange traded commodities futures and options. There continues to be an ever expanding list of over-the-counter derivative products. These are SWAPS. SWAPS are privately traded products that are not transacted through a recognized exchange. It is not always easy to find a buyer and a seller who are willing to enter into such an agreement. The second problem is no liquidity. There is no one to sell this too should one of the parties wish to terminate the transaction prior to the agreed upon date.


The role of a commodity trading advisor is not limited to just trading. Understanding the industry from a different perspective is essential to understanding the changing investment climate. Analysis now becomes the catalyst to include a value added service to retain customers. Structured products, risk management, and OTC derivatives are all included. Continuing education has been and continues to be the hallmark of the best in the industry.
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