Ultimate Guide To Forex Trading

Over the past century or so global macro traders have been some of the most consistently profitable traders around. According to Credit Suisse global macro is the number one overall trading style since at least 1994. There are many reasons for this not the least is the opportunity to play out an entire trading theme.

The global macro mandate is simple, make money You can trade the SP500, you can trade the Thai Baht, you can trade pork bellies. But you must make money. Global macro is the most opportunistic and truly capitalistic trading tyle there is. You can trade anything anywhere as long as you can make money. So instead of focusing on one asset class above all else macro traders are able to go where the money is and focus on the best opportunities anywhere and not just in the regular playground.

Another factor that separates the global macro investor from many of his trading brethren is that he or she uses very strict risk management rules. The idea for this likely came as more traders left the pits and were sick of seeing people blow their accounts up due to leverage. If you trade levered up and do not cut your losses quickly then you will eventually go the way of the dinosaur and disappear with no money. So risk management is very key to the global macro investor’s success.

Now that we have discussed the opportunistic behavior and the risk management aspect of global macro trading we will talk about another major benefit of global macro trading The next best thing about global macro is that you can trade an entire investment theme. From start to finish you can trade the appropriate instrument, or instruments to best capitalize on the theme.

Depending upon your trading vehicle you can take advantage of part of the theme. And instead of participating in the second leg of the theme with a proxy security, or one that doesn’t meet the exact scenario but comes close you can use the right security.

If you are a global macro investor you take advantage of all your research and trade the entire theme from start to finish. You go from one security to the next all the while making use of the same piece of research. By looking across assert classes you can also pick the most effective instrument for different scenarios.

The path makes sense and yet we see trader after trader just stick to one asset class and not take advantage of all the opportunities out there. If you are successful at trading and therefore have a solid respect for risk, you can become a good global macro trader.

The benefits and profitability of thematic trading is very strong. Why traders and investors leave half the money on the table is beyond us and we would encourage you to look at what you can do, at what you have researched, and where else along the curve can you trade it and profit from it.