Commodity Trading Advisors (CTAs): What They Are & How They Work

A commodity trading advisor is an individual or a business that advises traders in choosing commodity investments and options. These individuals can also sometimes be in charge of trading managed futures accounts on behalf of other investors. This individual or business is highly skilled and knowledgeable about the commodity futures market and how it works.

The commodity trading advisor receive a commission for placing trades for their clients. They also can sometimes receive a commission just for providing advice to the trader. In order to qualify as a commodity trading advisor, one has to be registered with the Commodity Futures Trading Commission. This is a process that is done through the National Futures Association or NFA. 

Many people that venture into the commodities market are unfamiliar with the market and how it works. By hiring a commodity trading advisor, one can navigate the market more easily. The commodities market is extremely volatile compared to some of the other financial markets that are in the industry. Many people need guidance in order to be successful when trading commodities and a trading advisor can provide this for them. In some cases, they will actually handle the process completely through a commodity trading pool.