Commodity Trading Advisors (CTAs) are responsible for the actual trading of managed accounts. There are approximately 800 CTAs registered with the National Futures Association (NFA), which is the self-regulatory organization for futures and options markets.
The two major types of advisors are technical traders and fundamental traders. Technical traders may use computer software programs to follow pricing trends and perform quantitative analysis. Fundamental traders forecast prices by analysis of supply and demand factors and other market information.
Either trading style can be successful, and many advisors incorporate elements of both approaches.
Trading Managers are available to assist institutional investors in selecting CTAs. These managers have developed sophisticated methods of analyzing CTA performance records so that they can recommend and structure a portfolio of trading advisors whose historic performance records have a low correlation with each other. These trading managers may develop and market their own proprietary products or they may administer funds raised by other entities, such as brokerage firms.