Trading Advisor Agreement
Under the Real Estate Exchange Act, authorized persons may be exempt from CTA registration with the CFTC, even if their core business is not active as a CTA, if they are registered as investment advisors with the Securities and Exchange Commission and if they have not provided business advice to more than 15 individuals. If a person is exempt from registration, he must nevertheless register with the NFA.  A CTA is exempt from registration with the NFA if they have given advice to less than 15 people A consultation in the goods trade and generally do not use the title of trade adviser to goods, or if they advise only through publications, a COMPUTER system or seminars.  In 1979, the CFTC adopted the first comprehensive regulation for raw materials consultants, which was then strengthened by additional provisions in 1983 and 1995. The additional provisions in 1983 strengthened the CFTC`s oversight of these advisors and authorized the National Futures Association (NFA) to register organizations, including CLATs.   The measures adopted in 1995 were aimed at increasing CTA`s advertising, the ability to increase investor knowledge and understanding.  There are three main investment styles used by CTS: technical, fundamental and quantitative. Technical dealers invest after analysis of graphic models. They often use semi-automated systems, such as computer software, to track price trends, perform technical analysis and trade. Successful trends or the use of technical analysis techniques to detect market fluctuations can greatly boost the performance and activity of a CTA. In 2010, Dr. Galen Burghardt, an associate professor at the Booth School of Business at the University of Chicago, found a 0.97 correlation between a subset of CTA trend and a broader CTA index from 2000-2009, indicating that the speculative technology trend was predominant within the CTA community.  Fundamental traders attempt to predict prices by analyzing, among other things, supply and demand factors in order to make a profit.
Other non-trend ATCs are short-term traders, spread trading and individual market specialists.  Basic ATCs generally invest on the basis of analysis of the major markets they act, analyzing weather conditions, land yields, understanding of oil drilling volumes, etc. Quantitative ATCs conduct statistical or quantitative analyses of market price models and attempt to predict on the basis of these studies. Many quantitative CTAs have a background in science, mathematics, statistics and engineering. [Citation required] A CTA is often offset by management fees, calculated as an annual percentage of the fund`s equity, and by incentive fees calculated as a percentage of new business profits.