In short, discretionary trading allows traders to be more flexible and trusting of their gut feeling. Let’s compare the discretionary and systematic macro trading systems with each other. What is the best macro trading system? Both approaches have their advantages and disadvantages. Usually, these models take into account a wide range of data points to identify potential trades, including historical market trends, economic indicators, and news events.ĭiscretionary vs Systematic Macro Trading The decision to buy or sell is made by a computer, which uses the rules defined by advanced systematic trading models. It then executes those trades by itself, without human intervention. Systematic trading uses numerous data points to identify potential trades. Systematic traders base their trading on computer algorithms and programmable models. This strategy is mostly used by large institutional investors and fund managers. Systematic macro trading can sometimes feel like the total opposite of discretionary trading. A discretionary trader is not limited to long or short-term investing, one type of asset or assets from certain countries or stock exchanges, but whatever they want - in line with the correct information. One of the key points of discretionary macro trading is that there are no limits. The analysis can be both technical or based on fundamentals, but the trader uses his or her own interpretation and intuition to come to conclusions and deploy capital as deemed wise. This is the more flexible and adjustable type of global macro trading, with discretionary traders relying on their own judgement and experience rather than pre-defined rules and parameters. These are the main types of approaches used by most macro traders. There are two different types of global macro trading systems: discretionary and systematic. The Different Types of Macros Trading Systems In the next section, we discuss the different types of global macro trading. Global macro trading, therefore, carries significant risks, especially if you don’t practice risk management and are unable to respond to rapid shifts in the market. Keep in mind that overall market sentiment can change suddenly due to unforeseen circumstances. This could include the outcome of an election such as the Brexit vote in 2016, or the crash in oil prices just before the pandemic. Global macro traders aim to try and profit from both up and downturns in the market that are based on the biggest themes developing in the world. ![]() However, it is also possible for individuals to use this method to try and improve their decision making. Global macro trading is used mainly by large funds and institutional investors, as it requires a high degree of knowledge and resources to collect and interpret the data. ![]() This includes instruments such as bonds, stocks, currencies, commodities, derivatives and crypto. Those global events include elections, natural disasters and geopolitical tenses between countries.ĭepending on the results of their analysis, global macro traders make market decisions speculating on the direction financial instruments might go. ![]() Useful data that can be used are interest rates, inflation, exchange rates, government policies / political changes and global events. Global macro traders typically analyse a wide range of economic and financial data to identify trends and market opportunities. Let’s start with the definition of global macro trading: “Global macro trading is an investment strategy which is based on the science or art of trying to predict large-scale events related to national economies, history, international relations and global themes.” Learning Lessons from Famous Global Macro Hedge Funds and Traders. ![]()
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