You can find rankings of CTAs at Attain Capital.  You can also look at trading systems that are offered (which is a similar thing) and see how they have performed in real life trading at Collective2.

A good CTA will be focussed on earning most of their income from performance fees rather than brokerage.  They will have their own money in the fund rather than just using other people’s money.  They will be able to demonstrate a history of full time trading in the markets, preferably with a large organisation such as an investment bank.  Investment banks tend to not select or retain traders who lose their money.

Make sure that they are properly authorised to trade on your account – in the US if someone trades on your account, they must be a registered CTA.  Just because they are registered doesn’t make them a trading guru.  In other jurisdictions, a broker can trade your account if you authorise them to do so.

In conclusion, don’t write off managed accounts, but chose the traders who can help you, not those who have an eye on how much brokerage they can rip off and who can’t demonstrate a performance history.

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Tags: broker, CTA, managed account, scams

This entry was posted on Friday, April 25th, 2008 at 3:36 am and is filed under Scams to Avoid. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.