So you have decided to take a look at managed futures trading strategies. How is this different than just trading your own account? Which is the best allocation of risk capital? Let’s compare a few features and you can review these managed futures points and determine if managed futures trading under direction of a commodity trade advisor works best for your trading goals and risk tolerance levels.
Overall Profit Potential
- Managed futures funds have the potential for profits if positions gain in value beyond original costs, but so do self directed accounts
Overall Risk of Loss
- Managed futures accounts and self directed accounts have a substantial risk of a loss. Some trading strategies may have an unlimited risk of loss. Losses may exceed original investments
Costs of Trading
- Self directed accounts and managed futures accounts are subject to the same potential costs of commissions and exchange fees with each trade. Managed futures accounts may have additional incentive and management fees as well as a one-time fee for the introducing broker when the account is opened
Access to Research
- Another point where self-directed accounts and managed futures accounts are neck and neck. The research is there for the taking for either account. Whether you find it or the cta advisor does, the access is the same
Market Experience
- This is where the two start to deviate. A commodity trade advisor may have insight and experience that you do not. However, it is possible that your experiences in investments are varied and thorough. This is a personal evaluation that only you can make
Time Management
- A commodity trade advisor watches the markets and open trades for a living. In a world where some futures markets may be 24 hours, this can be an important factor for your decision. If you feel that your ability to managed a self-directed trade may not be possible with your schedule, then only you can determine if the benefits of leaving it to commodities trading advisors is best. Remember, you should still invest the time to review trades and any information you can even if you have a managed futures account.
Portfolio Diversity
- Again, this is a feature that may depend on the experiences and trading strategies of the commodities trading advisor versus your own experiences and strategies. Only you can determine if the potential CTA will offer the diversity you want for your trading goals
Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.
