So You Want To Be A CTA?
CHARLES LE BEAU CTA CONSULTANT
PROVIDING PROFESSIONAL SERVICES
TO HELP GOOD TRADERS BECOME SUCCESSFUL CTAs
Becoming a CTA
is easy, but becoming a successful CTA takes more than just good trading. Here are some of
the necessary steps to become a CTA and a brief description of how we can help.
Assist In
Registration and Creation of Business Entity: Advise as to proper entity and pros
and cons of various start up options. Help with registration paperwork and follow up.
Help Develop a CTA Business Plan: Set goals, timetables, budgets and
develop realistic revenue and expense forecasts. Set up standards to measure progress of
the business.
Trading System Review and Research Assistance: Review and critique
present trading methodology. Point out strengths and weaknesses. Highlight strengths for
marketing purposes and identify any potential problem areas. Suggest improvements and
areas for further research and assist with research if required.
Recommend procedures to monitor performance so the CTA will know if the
system is working as it should. Advise on how to recognize when the system has failed
before it is too late. Suggest modifications to solve problems before they arise. Suggest
possible improvements to make the strategy more appealing and marketable. Suggest proper
capitalization of trading accounts to insure adequate performance with reasonable
drawdowns. Review money management and risk control strategies. Advise on size of accounts
to be managed and help with organization of pools if deemed advisable.
General Industry Education: Which CTAs have been successful and why.
Which
CTAs have failed and why. What is the industry looking for. What niches are open and which
are filled. Where do the opportunities lie. Where is the industry headed and what are the
opportunities that will be presented in the near future.
Set Up the Office: Recommend equipment and software. Advise on
communications hardware and software for phone, fax, modem and e-mail. Establish
procedures for backup of communications, quotes and vital records. Provide “what
if” scenarios and develop emergency procedures for fire, floods, extended power
failures, office burglary and other potential disasters. Advise on staffing, insurance,
benefits and control of expenses.
Write the Disclosure Document: Draft content and format for the
document.. Submit final draft to attorney for simple review. Submit document to CFTC and
NFA. Handle any necessary modifications to document after review.
Establish
Compliance Procedures: Write an internal Policy and Procedures manual. Establish
files and mandatory record keeping procedures. Draft a “due diligence”
information kit and prepare for typical questions that will be asked by entities placing
money with the CTA.
Establish Brokerage Contacts: Help negotiate brokerage relationships for
efficient order entry, clearing, communication, record keeping, and “give up”
administration. Establish control procedures for “split fills” and fair and
impartial order allocation. Find brokers who may provide free services and money raising
assistance in addition to order execution. Help to negotiate favorable commission rates.
Set Up Accounting and Record Keeping: Establish format for performance
reporting. Advise on accounting software and services. Prepare for industry audits by NFA
or firms placing money. Could provide performance accounting for CTAs on a monthly basis.
Marketing: Introduce CTA to trading managers and managers of managers who
are capable of making investments with CTAs. Introduce CTA to outside marketing agents who
can raise money. Help to negotiate favorable terms and performance incentives with money
raisers. Advise on exclusive vs. non-exclusive marketing agreements and show how to avoid
paying fees to money raisers who are no longer actively raising money for the CTA.
Establish reasonable but adequate marketing budget for conferences and travel. If desired,
attend first marketing conferences with CTA. Make networking introductions and help to
"work the room". Advise on how to set up conference meetings and prepare CTA on
what to say and what not to say at meetings with potential investors. Help draft marketing
materials. Design monthly performance communications and list of where to send them..
Share files of more than 1200 marketing contacts accumulated over ten years of marketing
as a CTA.
On-going Support: Provide continuous input on trends and new business
opportunities. Most CTAs barely have enough time for trading and need someone else to
handle many of these items.
Help with any problems that may come up. Help advise during difficult
drawdown periods. (Most new CTAs are not aware that there are certain investors who place
money only when the CTA is in a drawdown.) Review system performance and see if drawdown
is serious enough to warrant any changes in the system. Help with modifications if
necessary. Work with CTA when needed to prepare for audits and due diligence visits by
large investors.
Help plan for success: Provide guidance in periods of success which can
often cause CTAs more problems than failure. Plan ahead to know when to expand, how to
expand and what to expand. Point out potential success traps to avoid. Advise CTA on how
to grow in an orderly and controlled manner and maximize the full potential of a
successful business.
Need help or have
a question about becoming a CTA?
