Commodity trading advisor CTA

A commodity trading advisor (CTA) is an asset manager who follows a set of systematic investment strategies in futures contracts and options on futures contracts. The advisors originally operated predominantly in commodities markets, but today they invest in any liquid futures market. They are responsible for the trading of managed futures accounts. There are approximately 800 CTAs registered with the National Futures Association (NFA), the self-regulatory organization for futures and options markets in the U.S. The two major types of advisors are technical traders and fundamental traders. Technical traders may use computer software programs to follow price trends and perform quantitative analysis. Trend following, or using technical analysis to follow swings in the markets, drives CTA performance and activity to a large degree. In a recent interview, Professor Galen Burghardt, adjunct professor at the University of Chicago's Booth School of Business, shows this by tracking a subset of trend following CTAs and compares them with a broader CTA index (from the period 2000-2009), finding a correlation of .97 between the two groups, showing how large the impact of trend following is in the CTA business.

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