Questions and Answers

Q: What is a CTA Managed Options and Futures Account?

A: A CTA managed account is one where a registered Commodity Trading Advisor (CTA) is given responsibility to make all trading decisions. This authority is delegated by the account holder to the CTA through a limited power of attorney which may be withdrawn at any time.

Q: How can I track the performance in my managed account?

A: Three ways. One, a complete accounting of the activity in your account with your account balance can be seen on our clearing firm's Internet web site 24 hours a day. (Ask us for more details.) Two, you may call us and receive a daily equity run detailing all your open positions, netting out profit and losses, showing the exact daily balance of your account. Three, whether you call or not, a purchase and sale statement (P/S Statement) will automatically be sent to you on every single trade, showing the date and price entered; when you exit a trade, the date, price, and net profit or loss on the trade as well as your account balance.

Besides receiving confirmation on each individual transaction, a summary of all transactions showing their results are sent each month for the entire month's transactions. Therefore, even without calling, you will have a written, detailed breakdown of the CTA's transactions and performance in your account.

Q: How accessible are my funds in a managed account?

A: A managed account offers a high degree of liquidity. Although we strongly advise you to view your managed account as a long-term investment, part or all of your funds are usually available on one day's notice. However, there may be times when market conditions are such that positions may be difficult to liquidate.

Q: How much money should I invest in managed futures?

A: Only risk capital should be used in managed futures and options or any speculative investment. We recommend the amount you invest should depend on your own individual preferences.

Q: Can I use retirement funds in a managed account?

A: Yes. You can use IRA, trust, pension, and other retirement monies, such as 401K rollovers and 403B funds. Past Performance is not necessarily indicative of future results. The risk of loss exists in futures trading.

Q: Are there any tax benefits to investing in managed futures?

A: Yes. According to the Tax Act of 1981, short-term profits in commodities are treated as 60% long term and 40% short term. On the other hand, short term trading profits in stocks are treated as 100% short term. A short-term investment is one that is held for less than one year. This favorable tax treatment in commodities can translate to investors in upper tax brackets, saving as much as 30% on taxes in short term gains on commodities versus stocks!

Q: Where is my money kept?

A: Your money is held at one of three Futures Commission Merchants (FCM). Vision Financial Markets currently holds the customer equity and is the FCM of choice of over 130 Introducing Broker offices as well as numerous professional traders and CTAs. According to Crain's New York Business, Vision is the New York area’s 171st largest privately held company, as of December 2007.

Furthermore, Edward Thomas Trading also maintains additional clearing relationships with both Peregrine Financial Group (PFGBest) as well as Rosenthal Collins Group LLC.

Q: How do I open a managed account?

A: Before opening a managed account, you must be supplied with a copy of the CTA's disclosure document and a breakeven analysis detailing the point at which your account would breakeven, net of all costs for the first two years.

Read both carefully before you invest. Go over questions you may have with us here at Edward Thomas Trading Company. We will also review with you all costs and fees associated with the particular CTA.

After any questions you may have are answered, we will help you fill out the management agreement and the corresponding customer agreement forms, both of which you will send back to us at Edward Thomas Trading.

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