What is CTA? What strategies does CTA adopt?

The full name of CTA is Commodity Trading Advisors, which is "commodity trading advisor", also known as managed futures. It is an investment manager recognized by NFA (National Futures Association), registered with CFTC (Commodity Futures Trading Commission), and regulated. CTA generally refers to an institution or individual that obtains expected annualized returns by providing customers with trading advice on options and futures or directly participating in actual transactions through a managed futures account. In foreign countries, CTA is generally employed by the commodity fund manager (CPO) of a futures investment fund. All CTAs must register as members with the CFTC and NFA. CTA must regularly report accounts to the CFTC, provide transaction records, and disclose information; it must regularly submit reports to the NFA for information disclosure. CTA registered students pass the training courses of NFA-approved institutions, participate in and pass the unified examination prescribed by NFA at NFA-approved examination institutions, and those who pass the examination are guaranteed to register with CFTC and NFA by existing CFTC and NFA members. After reviewing the information provided by the students (including fingerprint files) and the non-criminal record certificate recognized by the country where they are located, and confirming that it is correct, they can successfully register as an NFA member and obtain the qualification to practice.

CTA’s classification Traditionally, CTA’s investment products are limited to commodity futures; however, due to the extensive and in-depth development of the global financial futures and commodity futures markets over the past decade, CTA has gradually included them. The investment field has expanded to almost all futures varieties such as expected annual interest rate futures, bond futures, stock index futures, foreign exchange futures, basic metal futures, precious metal futures, energy futures, power futures and agricultural product futures. Depending on the market participation and transaction methods, CTA has different subdivisions.

About U.S. CTA CTA is often synonymous with high salary in the United States. The annual salary of a CTA usually reaches millions of dollars, and the annual salary of a star CTA can reach tens of millions of dollars. The well-known Soros and Rogers are also members of the American Futures Industry Association. All fund managers involved in futures and financial derivatives are also registered with the American Futures Industry Association. According to the institutional investor industry magazine "Alpha", the average annual income of the 26 highest-paid hedge fund managers in 2005 was US$100 million. Among them, international financial tycoon George Soros was the third-highest paid hedge fund manager in 2005, with an income of billion US dollars. The fees paid by funds or individual investors to CTA include fixed consulting fees and performance incentive fees. The fixed advisory fee is calculated as 0-3% of the net value of the fund portfolio managed by CTA. The performance incentive fee is paid based on a certain percentage of the net appreciation of the fund generated by the investment portfolio managed by the CTA, generally between 10% and 30%. The United States has very mature futures investment funds. Futures investment funds mainly include three types: Public Funds, Private Pools and Individual Managed Futures Accounts (Individual Accounts). Public futures investment funds are similar to domestic open-end or closed-end funds. They are relatively transparent, but the cost of participation is high. The operation is not as flexible as private equity funds and personal management accounts, and the return on investment is the lowest among the three. Private equity often takes the form of a limited partnership, with flexible operations and low fees. It is suitable for high-income individuals or institutional investors. The number of investors and the minimum capital contribution are strictly limited. Investors can also directly choose a CTA to manage their funds and open a personal managed futures account. Investors directly hand over their accounts to CTA for management, which is actually equivalent to purchasing CTA's trading skills. The advantage is that the management fees of public and private placements are waived.

Strategies adopted by CTA All trading strategies used by CTA can basically be divided into two categories: trend trading strategies and counter-trend trading strategies. Trend trading strategy is the most widely used trading strategy of CTA. Trend trading CTAs use a number of different indicators to cut through the market noise and find the current market trend, and then take a position. They profit from the continued development of the market trend. Moving averages, trading volume, cycle theory, etc. are all indicators commonly used in trend trading CTA. Trend trading CTA can be divided into short-term traders, mid-term traders and long-term traders according to different time periods. Counter-trend trading CTA usually uses reversal indicators such as head and shoulders patterns, breakthrough patterns, and trading volume to discover trend turning signals and then establish positions. Whether it is trend trading or counter-trend trading, CTA attaches great importance to position risk management.