What is a Commodity Trading Advisor?

A question from Yahoo! Answers:

What is Commodity Trading Advisor?

I know as much about Commodity Trading Advisor as the name suggests. They make money by teaching others how to trade commodities. Do you know if they also manage their client’s money under the same firm? Any inputs about CTA is appreciated.

The business of a CTA has nothing to do with teaching. CTAs manage their clients’ money by using it to speculate in the futures markets. Each client has their own account, and the CTA may devise a personalized trading strategy for each client.

The alternative is called a Commodity Pool Operator (CPO). A CPO pools money from many clients into a single account (much like a mutual fund), so all clients within the same pool are essentially invested into the same strategy; no personalization is possible.

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