Commodity Trading Advisors are no longer viewed as just Portfolio Managers. commodity trading derivatives His role has expanded considerably as investment products become more complex.
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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 Strocen, President of Genuine Trading Solutions says once upon a time a Commodity Trading Advisor was content to be known as a Portfolio Manager trading commodities and futures for a managed futures 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. Trading derivatives for a managed fund of futures continues to be important. CTAs are also more involved in derivative analytics. This role is essentially focused upon becoming an analyst to structure and analyze the more multi-faceted requirements demanded by hedge funds, pension funds and structured products.
In order to preserve asset growth, it is crucial to use derivative analytics in order manage adverse risks of an equity or bonds portfolio caused by adverse market conditions. The uses of hedging to prevent volatility has long been understood by the largest institutions but is now available to the smaller sized company and to the individual investor. As products continue to develop, the CTA will also evolve to meet the needs of today's professional manager.
Derivatives are not limited to commodities exchange traded futures and options. Over-the-counter derivatives continue to expand. These are SWAPS. SWAPS and privately transacted products transacted without the use of a recognized exchange. It is not always easy to find a buyer and a seller who are willing to enter into such an agreement. Second, there 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. It is now imperative to understand the industry in a new light so to understand the changing investment environment. The analysis is now the catalyst for adding a value-added service to retain clients. This includes structured products, risk management and OTC derivatives. Continuing education has been and continues to be the hallmark of the best in the industry.