A fundamental approach to the markets when combined with the assistance of technical analysis has become increasingly important. The majority of CTAs with the bulk of the money under management are systems traders. They are quite predictable and do well when the markets have defined trends.

CTAs who are fundamentalists fit very well into a mix that a Commodity Pool Operator (CPO) or capital raiser puts together for a pool that includes the various types of approaches to trading. Since there are a large number of fundamentalists, an approach that includes a discretionary element is valuable if you have that talent.

Discretionary strategies do have their down sides. The number of markets you trade is limited because you have to babysit the markets. In addition, your ego is at risk every day. The system didn’t go wrong—you did.

Investors will want to see a certain level of objectivity in a discretionary trader. They will want to know how much risk you take, whether you have obeyed your own rules, and how disciplined you are. Some may even want to know your current psychological state.