If I you haven’t heard me say it enough times, then I will say it again: Global Macro is one of, if not THE most powerful trading transformation you can ever have take place in your trading life.
Once you learn it, it can be used in all sorts of things.
You can use it as a stand alone system, when you combine it with various timing methods. Two timing methods I use and that I reveal in the Order Flow Mastery Course are: Market Sensitivity and what I developed called “The Macro Model.”
You can use it as an input in your existing trading system. If you are using technical indicators or chart patterns or price patterns, or anything for that matter, you can use global macro to juice the performance of your system, if you do it right. There are some people who understandably do not want to part with their current indicators that they use. That doesn’t mean they can’t do global macro. They absolutely can! They just combine the macro with whatever technical analysis or other system they are using. They can either take signals when both the macro and their systems are pointing in the same direction, or they increase the position size on those signals where the macro and their system are firing off signals in the same direction.
However, there are still some people who persist in disparaging the macro. They poo poo it as if it is some voodoo.
Swiss National Bank Macro
Well, let me give you a simple example of my interpretation advantage applied to a Bloomberg news article about the Swiss National Bank, found here.
The key sentence I want you to focus on is this one:
We can see reducing our balance sheet once macroeconomic circumstances and the requirements of monetary policy allow us to sell foreign currencies and buy back francs.
– SNB Danthine
Notice how he said they will change policy once the “macroeconomic circumstances” allow them to. He did not say they will change policy when the moving averages cross over, or when the market breaks a trendline, or anything related to a chart or technical indicators. He said when the macro conditions change!
Not that charts aren’t useful. They are and I use them everyday. However, I learned years ago that I had to have a very strong component of the information flow and everything else that was going on “outside of the chart” – so that I could have a trading edge.
And if you don’t believe that expected changes in monetary policy can cause big market moves – well just look at a chart of EUR/USD or USD/JPY. Do you really think they were caused purely by technical analysis?
These are big hints for all the people who have not yet embraced the Global Macro Transformation.
Global Macro Shortcut
I get people that ask me how do you learn global macro? Or how do you cut down the time it takes? What do I have to do? Any shortcuts to global macro success available? Shortcuts don’t usually work, but…
Here is another secret I will give you that cuts down the time it takes:
Pay attention to what the central banks are saying about their own economies and also other countries economies.
For example, when the Bank of England released it’s Monetary Policy Minutes last week, they commented on other countries’ economies. Read it and pay attention to that macro information. It can give insights into the situation that is going on.
So if you are a bit lazy on doing the work to interpret the data, well you can have the central bank interpret the data for you and they give you their synopsis of economic conditions in another country. They do some of the work for you!
I have noticed that most people don’t do such reading because they are intimidated at the information and jargon. Well guess what? You don’t have to understand 100% of it. You can make as much money as you want only understanding the key elements of the meeting minutes, rate statements, etc. In fact, in you were to understand and pay attention to 100% of it, you would probably be wasting your time as nowhere near all of it is useful to a profit seeking trader.
As George Soros said in his book Soros on Soros:
I don’t like working. I do the absolute minimum that is necessary to reach a decision. There are many people who love working. They amass an inordinate amount of information, much more than is necessary to reach a conclusion.
When I read that quote years ago, it lifted so much weight over my shoulders. I finally stopped being so hard on myself trying to interpret every tiny bit of information that came my way.
Don’t be one of those people who amasses much more trading information than is necessary. Know the difference. I know it is hard in the beginning, but it is certainly a skill that you acquire and hone. There is no such thing as being born with global macro skills. Everything in trading is an acquired skill.
If you want more information on how to start and progress quickly through the global macro trading transformation, then click here.
New Trading/Investing Book Alert!
Tony Robbins has just released his new book: MONEY Master the Game: 7 Simple Steps to Financial Freedom.
While I am not interested in passive investing strategies, as I am a more active trader, he did interview some of the richest people in the world including Paul Tudor Jones and Ray Dalio. So I know if I can even find just a few worthwhile quotes in such a book using my interpretation advantage, it is worth the read.