Managed futures investments can have strategies as varied as other alternative investments. Managed futures don’t deal with stocks or equities, just the futures contracts trading in futures investing environments online and through brokers for futures exchanges. Many of the terms and names of strategies may be similar to other forms of investment, but here they refer to futures and options on futures contracts.

Normally, a commodity trading advisor will use fundamental or technical analysis – or likely a combination of both – to determine entry or exit points for futures trading strategies. Fundamentals are things that might affect supply and demand, like weather, political events, crop plantings, economic reports, retail reports, etc. Technical analysis usually concerns itself with certain perceived trends in prices or statistics for those prices. Sometimes technical analysis focuses on the patterns the trader observes on price charts.

Managed futures strategies can be straight futures plays, straight long option investments, or short options trading strategies. Short option strategies are also known as option writing and could involve credit spreads. Be aware that many short option strategies have an unlimited risk of a loss.

To determine which strategies may be used by a particular commodity trading advisor, take a look at the disclosure document. It will likely detail the kinds of trading strategies, as well as the approach to the markets, that the advisor likes to employ. It will probably also include information on the kinds of risk management which the commodity trading advisor applies. Risk management techniques may include using covered option spreads, or simply limiting allocation of funds to a certain amount per trade.

The disclosure document will probably also cover the kinds of futures markets in which the advisor will trade. Some CTAs may focus primarily on one or two markets like certain commodities or equities. Other trading advisors may have an investment strategy that hinges primarily on diversity and allocates a little of the portfolio to each of the sectors or non-correlated markets.

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.