What mistakes might investors make when choosing a CTA?
Probably the most common mistake is to not have a disciplined strategy and jump in and out of a managed futures account. Markets spend much of their time becalmed in non trending doldrums. Losses may occur during such times, and often do. Jumping in and out of investments means that you are likely to be out of the market when the “wind picks up again.” The way to build wealth is to have a disciplined plan and to stick with it. Another common mistake is to be mismatched; having a different investing philosophy from your CTA. For example, you may have a goal to gain a 100% annual return, and are willing to suffer an 80% likelihood of a complete loss of capital to achieve that aggressive goal. However, your CTA may be relatively conservative and wish for small drawdowns, being satisfied with a target of a 20% annual return. In this example, the two investing philosophies are not in agreement and the differing assumptions could lead to unfulfilled expectations. Note that goals and philosop
