Commodity Trading Advisors (CTAs)

CTAs have become an important factor in derivatives markets in recent years. Although smaller than hedge funds, there are several hundred of them controlling, in all, well over $25 billion. While many of them have less than $5 million under management and are acting for a selection of individual investors, others work for large US pension funds and smaller central banks. Although labelled as commodity traders, they are usually active also in currencies.

CTAs concentrate on programme trading, acting primarily on computer-generated buy and sell signals; their discretion is essentially limited to entry and exit points for a particular commodity, such as gold, and which market they will use. Since their trading depends very much on technical analysis, they tend to use markets such as COMEX where data is openly available rather than the over-the-counter options market that is not transparent.