They often employ partially automated systems, such as computer software programs, to follow price trends, perform technical analysis, and execute trades.
Successful trend following, or using technical analysis techniques to capture swings in markets may drive a CTA's performance and activity to a large degree.
In 2010, Dr. Galen Burghardt, adjunct professor at the University of Chicago's Booth School of Business, found a correlation of 0.97 between a subset of trend following CTAs and a broader CTA index from the period 2000-2009, indicating that speculative technical trend following had been dominant within the CTA community.
[7] Fundamental CTA's typically invest based on analysis of the core markets they are trading, by analysing weather patterns, farm yields, understanding oil drilling volumes etc.
[9][10] CTA Performance has been challenging over the last decade and investors have debated the beneficial characteristics of CTAs and trend followers at length.
CTA performance data tends to be freely available to qualified investors and can be found for instance at BarclayHedge,[11] EurekaHedge,[12] NilssonHedge[13] and a large number of other hedge fund databases.
The additional rules in 1983 increased the CFTC's oversight of such advisors and authorized the National Futures Association (NFA) to carry out processing of registration for entities including CTAs.
[21] Under the Commodity Exchange Act, CTAs must register with and conform to the regulations of the CFTC, including providing records and reports, unless they meet the Commission's criteria for exemption.
[25] On January 26, 2011, following the 2010 enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFTC made additions and amendments to the regulation of CTAs, including two new forms of data collection.
[22] Due to these changes, advisors managing funds that use swaps or other commodity interests may be defined as CTAs, subject to registration with the CFTC.