Commodity Trading Advisor

Commodity trading advisors are organizations or individuals who provide services and advice regarding commodity options, futures contracts, and commodity swaps. They are responsible for trading within a managed futures account. 

Commodity trading advisor jobs are most commonly found in hedge funds and other private funds, such as exchange-traded funds and mutual funds. Otherwise, certified professionals start their firm and practice.

They use a wide array of trading techniques and investment strategies, including futures and options contracts on multiple physical goods such as metals, energy, forest products, and agricultural products. They also tend to trade derivative contracts on financial instruments like bonds, currencies, and indices. 

CTAs have to be members of the National Futures Association (NFA), which is regulated by the Commodity Futures Trading Commission (CFTC), a state-federal government-regulated entity in the United States of America. 

Trading in such information-driven, physical underlying assets requires a high level of market expertise. Therefore, these professionals use multiple strategies, such as trend-following systems and automated systems, to meet clients' and investors' investment goals. 

These professionals are slightly different from commodity pool operators, who pool investor money and trade it, treating it as a single investment vehicle. CTAs address each client's requirements and invest according to their objectives and risk appetite. However, most CTAs set a minimum investment amount of $10,000.

A CTA's remuneration pattern is similar to that of most traders and advisors. They are compensated through a management fee, which is calculated based on the percentage of profits generated. They receive no compensation if they fail to generate a profit in a particular period.

A few of the most vital roles and responsibilities of a CTA after attaining their commodity trading advisor certification are:

• Providing trading/investment-related advice to clients on currency and commodity products
• Generating brokerage
• Executing orders on clients’ behalf
• Conducting extensive research
• Communicating research findings to clients for further actions
• Client management
• Onboarding new clients for commodity trading
• Developing investment strategies
• Risk management
• Compliance and regulation
• Implementing investment strategies

The foremost part of any profession is education. To obtain a commodity trading advisor license, an aspirant first needs a bachelor's degree in economics, finance, or a complementary field. 

Given the domain's high intensity and competitiveness, it is also advisable to secure a relevant certification, such as the Series 3 license or the more challenging Chartered Financial Analyst (CFA).

With these qualifications, the individual shall be equipped with the knowledge to handle client affairs and the challenges of the commodity market. Therefore, they can proceed to apply for membership with the National Futures Association (NFA).

These are just the technical aspects of becoming a CTA. The ideal way to ensure success is to ensure that the professional is constantly on a learning trajectory, on top of current affairs, and has fantastic fundamental and technical skills to execute trades.

In addition to these skills, the ability to manage clients and communicate complicated findings and reports has helped these professionals advance in the industry.

To land a gratifying commodity trading advisor job, a CTA is expected to meet specific criteria set by the NFA. They include:

• CTAs must appoint a security manager to get access to NFA’s ORS (Online Registration System)
• Fill out online Form 7-R
• Fill out the Annual Questionnaire
• Pay CTA membership dues (non-refundable)
• Pay an application fee of $200 (non-refundable)
• Fill out the NFA membership application

The registration criteria mentioned above must be met by all commodities trading advisor certification holders as per the National Futures Association unless:

• The individual has advised only 15 clients or fewer in the past year, and the firm or individual needs to portray themselves to their clients as a full-time CTA.
• It is exempted if the advice is provided to a client without directly targeting their trading account or their trading/investing interests. 
• The firm or individual is registered with the CFTC, and their advice regarding commodities is incidental to the firm's business or the individual's profession.