Why is Professional Management necessary and does having a managed account lessen risk in a portfolio?
In our opinion, Professional Management is necessary because the futures markets are very complex and trading experience, as well as, trading skills are largely responsible for success in this arena. Profitable trading requires discipline and temperament to respond to movements in the market; in addition to knowing when and how to liquidate positions as a part of a predetermined trading plan. All this has to be done systematically in the face of emotion to adhere to a proprietary plan designed to return profits. Futures trading involves risk. The same leverage and market movements that can produce profits can also produce losses. This same scenario can occur in a professionally managed account; however, one characteristic investors should look for in a CTA is a demonstrated ability to successfully manage risk over the long term. You must understand that losses can occur regardless who is managing your money.
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