You’ve also reviewed the central bank policies of Australia and the U.K., and you believe that rate hikes in Australia are not properly priced into the current AUD/GPB exchange rate.Īlso, since Australia is the second-largest gold producer globally and one of the top exporters, higher gold prices should boost the AUD because they’ll create a bigger trade surplus. You believe that worldwide inflation will accelerate due to massive fiscal stimulus and money printing by central banks, which should, in theory, boost gold prices. The simplest example of a global macro trade idea is a bet on currencies.Ĭurrencies are affected by many factors, including interest rates set by central banks, trade policy, economic growth, inflation, and geopolitical events. Global Macro Definition: Global macro is an investment strategy in which hedge funds aim to profit from broad market moves rather than from specific stocks or bonds they invest in currencies, commodities, futures, forwards, swaps, and more, and they analyze fiscal, monetary, trade, and geopolitical trends to make decisions. On the other hand, global macro might be the best strategy if you have a professional sales & trading background or you’ve been an economist, strategist, or policy researcher: What is Global Macro? In practice, very few hedge fund Portfolio Managers consistently achieve good results with this strategy over long periods.Īnd if you add in all the armchair “macro specialists” on online forums, the percentage of traders who perform well plummets. Some global macro trade ideas are so simple that the average person who knows nothing about finance could understand them.īut the execution is extremely difficult, which explains why some of the largest trading losses in history have come from macro-oriented ideas (“short nickel,” European index futures, oil and gas futures, etc.). Global macro might be the most paradoxical hedge fund strategy.
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