One way to start a CTA business is by writing a newsletter and giving away your trading ideas and signals. Once you build a large enough audience, you start to charge a monthly fee for your service. Once you get enough people willing to pay for your service, you announce you will no longer be offering it as a newsletter, but will be offering it as a money management product.
This is what I intend to do.
I have the company set up, John J. Lothian Managed Futures, LLC (“JJLMF”). It is registered with the CFTC through the NFA as a Commodity Trading Advisor. The CTA registration includes a disclosure document approved for use, with a prior track record trading nearly the same programs from 2004 to 2011. I could start trading for customers any time.
But I am starting over. I am starting from the beginning. I am going to publish a daily newsletter for the next six months and give away the trading signals for the Maple Sugar trading program of JJLMF for FREE.
I want potential traders and investors to see the pure behavioral system in action. I want them to understand the risk we take, and the ones we avoid. I want them to build a trust in the system and the operator.
Subscribers to the newsletter will receive an email first thing in the morning with instructions on how and where to trade #11 Sugar on ICE US and Canadian Dollar futures at the CME Group.
We have changed the systems slightly since they were traded with real money by John J. Lothian & Company, Inc. The biggest change is simply we moved the minimum account size from $35,000 to $50,000.
This is important because we will limit the amount risked on any one particular trade to about 2.5 to 3 percent. At no time will we take more than 6 percent risk when in both a sugar and Canadian Dollar position. With the larger minimum account size, we will be able to trade more actively, something the previous programs struggled with as sugar climbed from 8 cents to 32.
If the prospective risk for a trade is more than the 3 percent or 6 percent total, we will stand aside and not trade.
The trading system is based on the work of Jon Matte, the COO of John J. Lothian & Company, Inc. Jon produces the signals every day in Norway and will send them out. I will write regular commentary on when trades were executed, stops placed and positions entered and exited.
Here is the introduction to the Trading Method in the Disclosure Document:
“The programs were not created from fitting indicators to historical data; rather by examining markets and trading from a higher perspective. The first overview analysis generated a few basic ideas and goals, which were distilled to produce a generalized set of rules. The end result is a systematic core method that attempts to follow along with the market’s behavior with a systematic/discretionary risk management overlay.”
You can read more about the system from the Disclosure Document.
We will also be introducing other trading programs, including one like Maple Sugar, but that trades Cocoa and Australian Dollars. We also have an interest rate program that trades the yield curve, either by spreads or outright. These programs will be introduced in the coming months.
We don’t have real time track records on these last two programs, just theoretical results, so we will build a very public hypothetical track record for them.
The world has changed a lot since Jon created these programs or even I traded them last. I have decided to start over, build a new track record in plain sightght and see if these program have the potential I believe they have. Would you like to follow and see?