Commodity Pool

AAA

DEFINITION of 'Commodity Pool'

A private investment structure that combines investor contributions to be used in the futures and commodities trading markets. The commodity pool, or fund, is used as a single entity to gain leverage in trading, in the hopes of maximizing profit potential. The title "commodity pool" is a legal term as set forth by the National Futures Association (NFA). Commodity pools in the United States are regulated by the Commodity Futures Trading Commission (CFTC) and the National Futures Association, rather than by the Securities and Exchange Commission, which regulates other market activity.


Also called "managed futures funds."

INVESTOPEDIA EXPLAINS 'Commodity Pool'

Commodity pools are similar to mutual funds in that the investors' assets are pooled in order to make trades that would not be possible for each individual investor. The investor's risk is limited to the amount of his or her contribution to the commodity pool. Many hedge funds – private pools of activity managed capital – are commodity pools, and are registered with the Commodity Futures Trading Commission as commodity pools and Commodity Trading Advisors (CTAs).

RELATED TERMS
  1. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  2. Commodity Pool Operator - CPO

    Persons or limited partnerships responsible for investing a commodity ...
  3. Futures

    A financial contract obligating the buyer to purchase an asset ...
  4. Managed Futures Account

    An account that is like a mutual fund, except that positions ...
  5. National Futures Association - ...

    The independent self-regulatory organization for the U.S. futures ...
  6. Oil ETF

    A category of exchange-traded funds that invest in companies ...
Related Articles
  1. Fueling Futures In The Energy Market
    Options & Futures

    Fueling Futures In The Energy Market

  2. Learn To Corral The Meat Markets
    Active Trading

    Learn To Corral The Meat Markets

  3. Trading The Soft Commodity Markets
    Options & Futures

    Trading The Soft Commodity Markets

  4. Commodity Funds 101
    Mutual Funds & ETFs

    Commodity Funds 101

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center