Do expert trading professionals automatically make expert investors? Not necessarily. Our very temperament, which makes us highly successful traders in our day jobs, often becomes a stumbling block for our role as investors of our durable personal wealth. To help you become more fluent in the language of wealth management, Michael J. Evans of The Cogent Advisor will share the most common, trader-centric behaviors that detract from your efforts to convert transactional income stream into lasting family wealth.

Register now to join us on April 25, 2012 at 3:30pm CDT for the Trading Professionals’ Personal Wealth: Traps and Traits webinar.

An entry level view at getting started in trading futures. Understand the How and Why of futures markets and what market may be right for you. Determine your trading style and understand how professionals approach the markets.

• What you need to know about futures
• Range of markets available
• Trading Style - Fundamental vs. Technical
• The right futures market for you

Register now to join us on May 2, 2012 at 7pm CDT for the Begin Trading Futures Like a Pro webinar.

As part of our ongoing series, we are pleased to introduce the Chadwick Investment Group in this issue’s CTA Spotlight. Justin Vandergrift is President of Chadwick Investment Group Inc., which is located in Charlotte, NC.

The Commodity Trading Advisor offers one trading program, the Chadwick Investment Group Global Trend Following Program.

RJO: Thank you Justin for taking part in our CTA Spotlight series. Please tell us a little about yourself.

Justin Vandergrift: I graduated from the University of North Carolina at Charlotte in 1996 with a degree in History and Political Science. My interest in the markets began around the age of 10. I was fortunate to have a great uncle teach me how to read stock charts and Value Line reports. Summer visits were spent listening about earnings per share and other fundamental data. My father supplemented this education by introducing me to futures trading.

After college I went to work at John Hill’s Futures Truth Company. Futures Truth is a firm who independently evaluates trading systems. This is where I found my passion for trading systems. A trading system is a program that follows a set of pre-determined rules that dictate decisions. Systems trading removes emotions from trading. Human emotions can be detrimental to trading success. Most people cannot make efficient decisions under stress. When unexpected events happen, it is best to know in advance how you will react. This is the benefit of a trading system. I recognized that most successful money managers, those with longevity, were using a system.

I began a futures brokerage firm in 1997 and then Chadwick Investment Group Inc. in 2003. The goal of the brokerage firm was eventual transition into a money management company. After spending around a decade of working hands on with clients we transitioned into a Commodity Trading Advisor. Currently Chadwick is a Commodity Trading Advisor and a Commodity Pool Operator. I was also one of a handful of traders featured in “The Little Book of Trading” by Michael Covel in 2011.

RJO: Could you give us a brief description of your trading program?

Justin Vandergrift: After more than five years of extensive computer testing, our program began trading in June 2007. It is based on a systematic trend following method; we look for long term market movement and will take trades on the long and short side of the market. The duration of our winning trades is 6-8 weeks with losers being 2-4 weeks. Occasionally trades will last 6 months or more.

RJO: What makes your approach different from other CTAs?

Justin Vandergrift: Our goal is the growth of client assets through compounded performance. We focus on absolute returns. Recently, there has been an industry trend toward measuring ratios and away from absolute performance. In the end, success should be measured by how much money you make for your investors not the efficiency of some measuring statistic.

Within our peer group (other trend followers) you will find our market selection criteria are what differentiate us. We do not add a market into our portfolio simply for the sake of diversification. We do not trade all markets and do so for a reason. Our market selection is based on computer tested statistical parameters from 20 years of data, not simply chart analysis. Market selection is based on statistical market performance. Specific criteria are applied to market selections which then are scrutinized by our money management system for peak risk-return parameters.

RJO: What is your minimum capital requirement for your program?

Justin Vandergrift: The minimum investment is $250,000 with notional funding accepted.

RJO: One what markets does your program focus?

Justin Vandergrift: We trade a range of global markets ranging from currencies, financials, global financials, grains, soft commodities and stock indexes.

RJO: Have you ever changed your trading model? If so, when and why?

Justin Vandergrift: The current trading landscape is constantly evolving. New opportunities are created through new markets and the effects of one macro change can be felt through market complexes never before imagined. A decade ago farmers would not consider the effects of the Dollar Index on their ability to earn a profit. Today however, all things are related. Advisors who do not modify and adapt could have shortened careers. Our Global Trend Following Program has utilized our statistical trend following analysis since its inception with minor changes to improve its efficiency. Our trading parameters are retested annually and the best results are then applied so that we adjust to include current market conditions.

We have a commitment to continual research and we are constantly looking for new markets and new money management techniques. The core of the trading program is a quantitative trend following program in nature and no change or modification will be made to change that basic premise. Most of these changes revolve around money management, risk allocation and market selection, if they can be justified on a performance basis.

RJO: In your professional opinion, what is the single most important reason an investor should consider adding managed futures to their portfolio?

Justin Vandergrift: There is relativity to money that most investors do not understand. Your gains and losses should be compared to those around you to determine their significance. Making 20% in a year might seem like a substantial return. However if everyone else made 40% that year then your investments underperformed. Your return, even at 20% per year, made you poorer than your peer group. The same logic applies to periods of losses. If you lose 10% in a year while everyone else lost 15% that year then you out performed your peer group. You lost less than those around you. This is the benefit of managed futures to investor portfolios. Finding the right managed futures portfolio, ones that profit while your other investments are down, will blend out your returns.

RJO: Would you say your trading program is better suited to be a stand alone or part of a multi-CTA portfolio?

Justin Vandergrift: We trade a large basket of markets that most programs don’t. For this reason our program gives exposure typically un-matched from other CTA programs. We are well suited to be a stand alone program because we are diversified in comparison to other CTA programs. We trade over 40 markets both domestic and international. Our focus on minimizing loss parameters while maintaining high return is paramount to our system. Tomorrow’s opportunities are wasted if you do not have the capital to trade them. We track very well in comparison with our peers, yet use a different algorithm.

RJO: In regards to selecting a CTA or composing a portfolio of multiple CTAs, what piece of advice would you offer to a client?

Justin Vandergrift: : I would tell them to review advisors during extremes. Most of the time investors look at the end result of a portfolio blend – how much money the blend made and what the blend’s drawdown was over the sampled period. Correlation data between advisors is useful, but for multi-advisor blends it is problematic as correlation data measures two inputs against each other. The addition of the third creates a problem. The method I suggest it to review advisor performance during their extremes.

For instance, if there is a negative extreme, is the loss at the lowest ebb of the program too great for the client to tolerate? Many CTA's will create their program for certain levels of loss during a drawdown and as a client, this must agree with your level of risk tolerance. If the peak drawdown does not agree with the client's risk tolerance, he will be unhappy with the program performance. The pain of loss is generally more severe than the pleasure of a profit and thus losses cause greater anxiety for the client.

RJO: We’d like to thank you Justin for sharing your thoughts and providing some insight into the Chadwick Investment Group’s trading program. We appreciate your participation in this issue’s CTA Spotlight.

As always, we encourage everyone to check out the website: http://www.rjofutures.com/managed-futures/

In upcoming issues, we will spotlight each CTA to feature their particular area of expertise and the concepts behind their trading program(s). Anyone interested in more information regarding Managed Futures may feel free to contact me at CPeck@rjofutures.com or (312) 373-5338.

In the last few minutes, June Gold has dropped like a hot rock due to India cutting their rate overnight from 8.5% to 8.0%. India is trying to stimulate their economy by printing their local paper currency. However, when was the last time printing more paper money, reduced demand for hard assets like the yellow shinny one? If gold does not bounce soon, we can look for gold to retest last week’s low of $16325 or maybe even this month’s low of $16130 an ounce back on April 4th. Also, we have a bearish moving average cross over pattern with the 50-day setting up to cross below the 200-day which may cause additional selling from the gold bears. However, if this cross over pattern fails, we can see gold possibly rally up to at least last week’s high of $16813 an ounce. I have highlighted all technical levels below on my RJO Vantage daily candlestick chart.

If you'd like to learn more about futures trading or the Metals market specifically, please contact RJO Futures Trading Broker Nick DeGeorge at 312-373-5316 or ndegeorge@rjofutures.com.

I want to thank President Obama for creating the extra volatility in crude today. I was talking about the crude going lower in the last eview article posted and I still believe the trend has more downside to go before it would shoot up. Crude is getting past the switch over of blends period and we should see the price decline further into the high 90’s over the next week. You should watch the weekly energy report for tomorrow to see if the market can trade a little higher before it comes out and then look to sell the rally into a fresh new low. Crude will not withstand the current levels for too much longer. You need to decide on the trade you plan on using before getting in. The worst mistakes you can make are getting married to one side of the market and in the end taking off the trade for a large lose. If you are not holding any positions at the moment then look for the sell tomorrow morning and hold the trade until Friday morning.

If you'd like to learn more about futures trading or the Energies market specifically, please contact RJO Futures Senior Trading Broker Timothy Haberkorn at 312-373-5087 or thaberkorn@rjofutures.com.

Our sugar market commentary for 4/17/2012 finds us in a classic Jesse Livermore situation in regards to the sugar futures market. While this market has been under pressure for weeks, we feel strongly that the known fundamentals in sugar, bearish though they are, do not tell the whole story. Much of the recent move down in sugar has been predicated on the slowing in China and burdensome supplies. Our opinion is that the slowdown in China has been engineered by the authorities and is temporary at best. Demand for sugar likely won’t change much and one only needs to look as far as the crude futures market to see what happens when the Chinese are stockpiling a commodity. As such, as soon as the PBOC takes their foot off of the brake so to speak we expect the Chinese economy, and by extension other emerging Asian economies, to ramp back up rather quickly. In this situation Jesse would have doubled down on his long bet, maybe borrowed some trading capital from a wife or brother-in-law and thrown out a bullish line with one of his biggest positions ever. Of course, Jesse Livermore died by his own hand, penniless and alone. So, we go to the chart!

The sugar market has been under pressure since it failed to surmount the 25.00 level back in March. Intermediate term trend-followers were stopped out of longs and should be starting to get short. This morning the Hightower group highlighted the fact that the reduction in open interest has been relatively small in comparison to the size of the move in prices. They feel, as do many technicians, that this leaves the sugar futures market vulnerable to further, possibly dramatic erosion in price should those traders who hold these contracts, the Funds, capitulate. We are into a previous area of congestion that should be providing support. So far sugar futures have sliced into this area rather easily. Should we take out the 21.95 low from back in December this would place 21.00 and below in easily reachable territory. Fundamentally, we don’t think this is in the cards but the more one stares at the chart the more it looks not just possible but likely. With the funds being pushed into new short positions and longer-term funds in danger of being stopped out with moves below 22.30 or so we would look to use put spreads to take advantage of what might be an extended move lower. Fundamentally, our bias is still to the upside, but we won’t let that get in the way of what could be a nice, quick technically based trade.

If you'd like to learn more about futures trading or the sugar market specifically, please contact RJO Futures Senior Trading Broker Joe Nikruto at 800-453-4494 or jnikruto@rjofutures.com.

July ’12 Sugar Daily Chart

Source : CQG, Inc. (c) 2012. All rights reserved worldwide.

July cotton chose the downside and sold off through the 8810 support. It didn’t hold long as today, the day after it made the big move down, it’s now back up trading at 8900.

The last eView we recommended the July 9500/10000 1x2 call spread for roughly $200. Looking at the system it’s valued at roughly $145. The same rings true as last eView. In a perfect world if cotton settles at 9999 you’d make roughly $2250 and/or anywhere above 10442 carries potential unlimited risk.

The fundamental news out of India from cotton247.com. says "Anand Sharma, India's textile and commerce minister, announced on Apr. 9 that India will not permit additional cotton exports until an undisclosed future date. However, the approximately 2 million bales that merchants have already contracted for export will be permitted." The news out of India to ban exports might not have a big effect on this market anymore, but if the world decides they need more cotton in the coming weeks/months it could get interesting.

If you'd like to learn more about futures trading or the cotton market specifically, please contact RJO Futures Trading Broker Mike Rataj at 800-453-4494 or mrataj@rjofutures.com.

July ’12 Cotton Weekly Chart

Source RJO Vantage

We have the supply news out of Ghana to thank for the recent rally in cocoa prices. July cocoa closed at 2226, above the 9-day moving average, which is a positive technical indicator for the short-term. Yesterday’s supply news showed us that the dry weather in Ghana will have an effect on production. With this news we are trying to recoup losses from the past few weeks. The British Pound trading in the green, shown in the second chart below, has also helped cocoa’s breakout. The CPI number released in the UK along with a little help from the global equity markets should help this positive trend continue for the Pound. Resistance is at 2258 and 2290; support is at 2178 and 2130 in July cocoa. If we can break this first level of resistance today we should continue to see the bullish trend as we await the North American grinding data this week.

If you'd like to learn more about futures trading, please contact RJO Futures Trading Broker Peter Mooses at 800-441-1616 or pmooses@rjofutures.com .

July ‘12 Cocoa (ICCN12) Daily Chart

Source RJO Vantage

June ’12 British Pound (6BM12) Daily Chart

Source RJO Vantage

July coffee still struggles to find support from a still "questionable" equities market, and well-supported dollar. The Hightower Group reports that "Peruvian coffee growers are projecting a 15% decline in coffee production during 2012", which could prove positive for coffee fundamentals. Fundamentally, coffee has little (if any) reason to find a bottom at these 170 levels.

On the technical side, like Tom Petty sang, coffee is still "Free Fallin". In my last eView article, I wrote that "Coffee continues to trade well below the 200-day moving average and will need some serious news from outside market forces to keep prices from revisiting the 170 levels, not seen since 2010". With a recent violation of the 3/22 low of 177.30, I see no support down to the 164 levels from November, 2009. Approach the bearish side conservatively and use put options and spreads to gain exposure.

If you'd like to learn more about futures trading or the coffee market specifically, please contact RJO Futures Trading Broker Adam Tuiaana at 800-453-4494 or atuiaana@rjofutures.com.

July ’12 Daily Coffee Chart

Source RJO Vantage

It is Tuesday and following Monday’s market selloff CME futures have recovered on short covering and rumors that China is again tendering for US corn. Also, export sales of US soybeans announced this morning to “unknown” destination. Perhaps a turnaround Tuesday can be in the cards for today. The volume of the overnight trade is small, which suggests that speculation in grain futures is backing off in the face of our North American growing season.

The overnight rally is led by wheat as key world production areas need rain. The Canadian Prairies and portions of Russia are parched with record heat noted across Russia. It is still a little early to be overly concerned by dryness, and with wheat testing 6-month lows and a record large fund short position, be very careful about shorting wheat at these levels.

Tonight we are going to hear the crop conditions from The USDA. What we will hear is that the corn crop is 20% to 25% planted. We are hearing more reports of producers tearing up pastures to plant crops. We do have limited acres here in our great country, USA, however producers will plant fence post to fence post this year. We think the month of April looks bearish for corn.

We do have a 20-week cycle low due in corn for the middle of May. We would recommend to get long corn in the middle of next month. There are gaps in July corn on day session only charts at 627 and 6404.We expect the corn market to fill these gaps at some time. The odds of a new crop weather scare are statistically high.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact RJO Futures Senior Trading Broker Stephen Davis at 800-367-7181 or sdavis@rjofutures.com.

Jul ’12 Corn Daily Chart

Source CQG, Inc. (c) 2012. All rights reserved worldwide.

30-year Treasury bonds have certainly had an interesting April as we’ve pushed back into our 139-144 trading range. Whether or not we can hold this channel again will depend on a few familiar factors. We’re under a bit of pressure today as euro zone debt concerns have slightly backed off. However, this doesn’t seem to be much of a trend-setter as these issues are a day in/day out indicator. We still have no official word as to whether more quantitative easing is in store, and with Obama speaking soon on the state of the economy, we certainly have a lot of “ifs” in the bond market. In the coming days, look for housing permits, corporate earnings and jobless claims to set the tone. Support on the June contracts (ZBM12) comes in at 141-06 today. Resistance is at 142-02.

If you'd like to learn more about futures trading or the Interest Rates market specifically, please contact RJO Futures Trading Broker William Moore at 312-373-5404 or wmoore@rjofutures.com.

Jun ’12 T-Bond Daily Chart with RSI and 9-Day Moving Average

Source: RJO Vantage

The US dollar has been in a very volatile trading pattern over the last several sessions. The trading range has been between 80.36 and 79.36 since the beginning of April. Look for the Greenback to pay close attention to the action in stocks, as it appears as if the bull market has lost much of its momentum over the past few weeks. I’m looking at purchasing the dollar index off of key support levels at 79.45 and 79.36. Utilize a stop loss at 78.65, with an upside target of 80.70.

If you'd like to learn more about futures trading or the Currencies market specifically, please contact RJO Futures Trading Broker John Caruso at 312-373-5286 or jcaruso@rjofutures.com.

Jun ’12 US Dollar Index Daily Chart

Source RJO Vantage

Do you have any questions or comments on this issue of eView—or anything else you'd like to discuss with our brokers?

When it comes to futures trading, what do YOU want to learn more about? If we already have a resource, we'll personally provide you access to it. If not, we might make it the topic of our next trading resource project.