CONFLICTS OF INTEREST: As stated below, the Advisor will trade for his own accounts. The Advisor will, in accordance with and pursuant to NFA and CFTC rules and regulations and good ethical practice, place both the proprietary and customer accounts from one block account in a bunched order. Both filled and split filled orders will be allocated on a lowest to low format. For example, the lowest account number will get the lowest fill and the highest account number will get the highest fill. Other than the statement above, the Advisor has no arrangements with any other entity or individual that would cause a potential conflict of interest. ================= does this mean that he is biasing the earlier (his and his family?) participants with better results? tricky way of stating that if that is what he is saying! anywhoo, i wish you great luck on your road to success 99 1/2% of the time its irrellevent because I haven't had a split fill in a long time, especially since I quit holding positions overnight. a year ago when I would get stopped out at 3 or 4am in the morning, I would get a split fill. but not anymore. the s&p emini is just to fluid. I can't remember the last time I got a split fill during day trading hours.
progers82: I believe that is standard practice for ctas - allocating the best fills to the accounts that signed up first (usually the cta's own and any friends and familiies that took a chance on him/her). A few others may allocate the best fills to the lowest numbered accounts on entry of the trade and the worst fills to the lowest numbered accounts on exits but I'm not sure how prevalent that practice is. -eLindy
There is no benefit to having either a high account number or a low account number when this method of allocating fills is used. The accounts that get the best fills on buys also get the worst fills on sells. Every account is treated fairly and equitably. jj
Average Price System .... see if FastTrade will sort u out w/ it .... they pkge the fills up and average the price for the whole lot ..... This is standard practice for bigger accounts and although I havent been in the biz for a few years I wud thnk for CTA's they wud b happy to provide the service........
Interesting. I expect to go with the CPO structure when I reach the point of trading OPM, for several reasons (listed in approximate order of importance): 1. A single large pool is more suited for trend-following strategies that require relatively large capitalization for proper diversification, and allows more granularity in money management for almost any trading system. 2. A single pool also is more suited for splitting funds between separate brokerages and/or trading systems. 3. Pooled money eliminates the need for a minimum investment (helpful when getting started with friends-and-family money). 4. I'd rather deal with the paperwork of pooled money than have to allocate trades to separate accounts in realtime. (It's possible that I'm wrong on that one.) 5. I'd like to avoid being picked to death by investors looking at their account performance on a daily basis, and just issue monthly statements.
Diode, Nice comments. I would agree and add that the CPO route allows for less transparency. While some claim to always want more transparency, I think there is a line to be drawn between discussing methods, procedures and practices and giving away the farm. It seems that if CTA customers get every trade, that after a while it could be possible to reverse engineer the system - for those that use a quasi black box approach.
Some investors (esp. institutional) insist on a separate account so they can integrate with their risk management program. Also, a good CTA will provide a much higher value-add than just the trading program. jj