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CTA
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Individual Trader
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Definitive Strategy
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Follows a long-term plan based on
extensively tested research. Attempts to
limit losses on losing positions, while
letting profits run on profitable
positions. This patient, disciplined
approach can pay big dividends: though,
with any investment, risk of loss
exists.
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Usually in the markets seeking instant
gratification. Because he lacks a
definitive game plan he often changes
his approach midstream, resulting in
impatience and chaos. |
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The
CTA requires what he believes to be an
acceptable minimum account size for his
trading approach. Knows that an account
properly funded may help enable him to
absorb losses while waiting for
profitable trades.
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Often undercapitalized and can only
absorb a few losses before his trading
capital is depleted, usually in just a
short period of time. |
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Often
has diversified trading positions
covering as many as 25 markets or more,
while typically committing only 10-25%
of his account's equity to the market at
any given time.
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Often commits 100% of an account’s
equity to the markets. He commonly
trades only one commodity resulting in
an overly concentrated position. |
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Timing
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Commits attention to following a
definitive system, which may look at
market prices and trends, and therefore
acts immediately upon signals and market
knowledge.
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Usually can pay only part-time attention
to the markets. He misses news, often
acts on impulses that lack proper
timing. |
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Discipline
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Expects his fair share of both winning
and losing trades. Neither result will
influence him to deviate away from his
preset buy and sell signals. He attempts
to cut his losses short while allowing
profits to run. Knows market conditions
may prevent him from limiting losses to
a specific amount.
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Believes his destiny is to predict the
direction of the market rather than
manage risk. This win-it-back at all
costs mindset inevitably could lead to
his downfall. He hangs on to losing
positions hoping they will come back.
Conversely, he will take profits
prematurely to validate his prediction.
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