After talking and corresponding with hundreds of traders global macro and otherwise over the last several years here are a few things that they learned the hard way. A few of the rules may sound cliche but they are the truth and they are time tested principles of successful trading.
Capital Preservation: This goes by other names such as risk management but the same principles apply. You must learn to size your positions on a standalone basis as well as in the context of a portfolio. You also need to learn to use and adhere to stops. If you don't then you leave yourself open to seemingly never ending losses. By not losing a lot on any trade you will have a better chance at making a lot. Simple but true.
Process vs Outcome: Another thing that many traders fail to realize is that your trading process is far more important than any one outcome. If you bought the Brazil Bovespa stock index and it went down then how does it affect your trade in US Junk Bonds? It shouldn't affect it at all. Yet time and time again traders let it get to them mentally and then it messes with their results. That of course means they lose money. Realize that the markets don't care about you. So focus on your trading process and not on individual outcomes.
Look for Real Opportunities: Look for the best risk to reward opportunities. Many traders will stay in a trade at the expense of everything else. Between not learning how to take a loss and just a bad understanding of opportunity cost many global macro traders will stay in a position when they could have made money in a new one. Look for trades with significant upside and minimal downside. The more you do this the lower your hit rate can be.
Learn To Use Research: Many people hesitate at paying for research and yet they have consistently bad trading ideas. If you are reaching your profitability goals on a consistent basis then good for you. If however you are like most traders and want more then maybe it is worthwhile to invest in some infrastructure and outside research. Try out several different services and find some that fill the gaps in your research. Most good traders subscribe to 3-5 different newsletters and a 1-3 different software products. Subscribing and then learning how to use these tools can give you an endless stream of solid and actionable trading ideas.
Read, Read, and Read Some More: Trading is an ongoing pursuit and most of the best global macro traders never stop their education. If you need to learn more about economics then buy a book or take a class. If you want to know more about earnings then read a book, take an accounting class, etc. Bad at reading charts? Join the MTA and look at some technical analysis books. Basically fill in the voids that you have in knowledge.
Your Body: If you neglect your health your trading results will show it. If your mind is not at 90% or higher then there is a great chance that your decision making process will be sorely lacking. If that is the case then you will obviously not be making the kind of money that you should be. Don't neglect your body and your mind will thank you for it.
By reading and doing the steps that were outlined for you, your trading should improve considerably. By looking at risk, research, learning more, etc. You should be in a better position to find the better trades and make more money. - 14915
Capital Preservation: This goes by other names such as risk management but the same principles apply. You must learn to size your positions on a standalone basis as well as in the context of a portfolio. You also need to learn to use and adhere to stops. If you don't then you leave yourself open to seemingly never ending losses. By not losing a lot on any trade you will have a better chance at making a lot. Simple but true.
Process vs Outcome: Another thing that many traders fail to realize is that your trading process is far more important than any one outcome. If you bought the Brazil Bovespa stock index and it went down then how does it affect your trade in US Junk Bonds? It shouldn't affect it at all. Yet time and time again traders let it get to them mentally and then it messes with their results. That of course means they lose money. Realize that the markets don't care about you. So focus on your trading process and not on individual outcomes.
Look for Real Opportunities: Look for the best risk to reward opportunities. Many traders will stay in a trade at the expense of everything else. Between not learning how to take a loss and just a bad understanding of opportunity cost many global macro traders will stay in a position when they could have made money in a new one. Look for trades with significant upside and minimal downside. The more you do this the lower your hit rate can be.
Learn To Use Research: Many people hesitate at paying for research and yet they have consistently bad trading ideas. If you are reaching your profitability goals on a consistent basis then good for you. If however you are like most traders and want more then maybe it is worthwhile to invest in some infrastructure and outside research. Try out several different services and find some that fill the gaps in your research. Most good traders subscribe to 3-5 different newsletters and a 1-3 different software products. Subscribing and then learning how to use these tools can give you an endless stream of solid and actionable trading ideas.
Read, Read, and Read Some More: Trading is an ongoing pursuit and most of the best global macro traders never stop their education. If you need to learn more about economics then buy a book or take a class. If you want to know more about earnings then read a book, take an accounting class, etc. Bad at reading charts? Join the MTA and look at some technical analysis books. Basically fill in the voids that you have in knowledge.
Your Body: If you neglect your health your trading results will show it. If your mind is not at 90% or higher then there is a great chance that your decision making process will be sorely lacking. If that is the case then you will obviously not be making the kind of money that you should be. Don't neglect your body and your mind will thank you for it.
By reading and doing the steps that were outlined for you, your trading should improve considerably. By looking at risk, research, learning more, etc. You should be in a better position to find the better trades and make more money. - 14915
About the Author:
Jeff works at TheMacroTrader.com Which publishes a weekly newsletter on macro trading using ETF's. TheMacroTrader newsletter Is for investors and traders that are looking for actionable global trading ideas.
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