Having a managed futures account is not a matter of “set it and forget it” as a famous personality used to say. As the client or account holder, you have your own set of responsibilities to your money, your account, and to the CTA.

First and foremost, learn about the managed futures strategies of that particular CTA. Read the disclosure document and learn about the CTAs performance as well as the fees that will come with your account. Before you ever open your account, you will likely be required to acknowledge that you have read the disclosure document. It is there for you as much as it is there for the CTA. There is plenty of information in there and since they should be updated every 9 months, it should be fresh and relevant.

Look at the managed futures strategies for that particular CTA. Some of them may be broad and varied, kind of a flexible approach which allows for trade designs to be adjusted for markets and conditions the CTA may observe in their analysis. Other CTAs may have a managed futures strategy that focuses on one kind of market and its subtleties, like grains or grain options or maybe short equity futures options. Some of these managed futures trading strategies may even involve selling options, a practice often referred to as option writing.  This practice, like many straight futures positions, may carry an unlimited risk of loss, so be aware if this is among the managed futures strategies that the advisor participates in.

Check the risk tolerance level of the managed futures broker. Do they use covered option positions? Are they trading long options only? Find out what the risk management strategies are and make sure that it is compatible with your views on money management as well as your risk tolerance levels. All futures and options trading will involve substantial risk of a loss, but you would not want to bite off more than you can chew through your intermediary. Any new account should be established with risk capital only. Never open a trading account with money you cannot afford to lose. Never trade with mortgage payments or other cost of living monies.

Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.