We have been in this business for a long time and have found these things to be lacking when helping struggling global macro traders improve their performance. In fact we basically look at these not as guidelines but as rules. You may have other problems but these are a few things that will help you to improve your investing results.
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.
Each Trade Is Independent: Another name for this is process versus outcomes. If you focus solely on the results of each trade you will go nuts when the inevitable losing streak come about and it could destroy you. Instead focus on doing the process right. Whatever your style is look and write down a lost if what you need to do before, during, and after the trade. Then when looking at your results you can evaluate them within context of your framework. If you followed it then you know that more often then not you will make money and losses are just the cost of playing.
Understand Opportunity Cost: In order to apply this to your trading you have to first look at what it means. Opportunity cost is what you are missing out on by making a choice. If you are in XYZ and you have no more capital then you may be missing the potential to make five times in ABC. Make sure that you are weighing the risks and the rewards before making a trade.
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.
Keep Learning: Many people come into trading after reading a book. Other global macro traders come in after years in school or from regular broker jobs. Well if you find that you aren't getting the results that you want then go find the information you need to fill in your educational gaps. There are a ton of different services, books, web sites, and courses that will teach you what you need to know about earnings, the economy, charts, statistics, programming, etc. Use these tools and don't rest on your laurels.
Health: Maybe the most under rated thing you can do is to be healthy. If you are in poor health studies have shown that you will perform at a sub optimal level. When you have thousands and millions of dollars on the line then it pays to be at optimal health. Be healthy and you will think more clearly witch usually results in better returns.
If you are able to follow these relatively simple steps then you will be well on your way to improving your trading performance. If you are already working on these weaknesses then good for you. If not then look inside yourself and work at improving your global macro trading performance.
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.
Each Trade Is Independent: Another name for this is process versus outcomes. If you focus solely on the results of each trade you will go nuts when the inevitable losing streak come about and it could destroy you. Instead focus on doing the process right. Whatever your style is look and write down a lost if what you need to do before, during, and after the trade. Then when looking at your results you can evaluate them within context of your framework. If you followed it then you know that more often then not you will make money and losses are just the cost of playing.
Understand Opportunity Cost: In order to apply this to your trading you have to first look at what it means. Opportunity cost is what you are missing out on by making a choice. If you are in XYZ and you have no more capital then you may be missing the potential to make five times in ABC. Make sure that you are weighing the risks and the rewards before making a trade.
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.
Keep Learning: Many people come into trading after reading a book. Other global macro traders come in after years in school or from regular broker jobs. Well if you find that you aren't getting the results that you want then go find the information you need to fill in your educational gaps. There are a ton of different services, books, web sites, and courses that will teach you what you need to know about earnings, the economy, charts, statistics, programming, etc. Use these tools and don't rest on your laurels.
Health: Maybe the most under rated thing you can do is to be healthy. If you are in poor health studies have shown that you will perform at a sub optimal level. When you have thousands and millions of dollars on the line then it pays to be at optimal health. Be healthy and you will think more clearly witch usually results in better returns.
If you are able to follow these relatively simple steps then you will be well on your way to improving your trading performance. If you are already working on these weaknesses then good for you. If not then look inside yourself and work at improving your global macro trading performance.
About the Author:
Jeff works at TheMacroTrader.com Which publishes a weekly newsletter on macro trading using ETF's. TheMacroTrader newsletter Is a great resource for investors looking to trade different asset classes across the globe.
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