It is a known fact that Forex is now one of the most prominent investment forms in the financial market. Forex or the Foreign Exchange Market is that part of the financial market in which people trade in currencies. The exchange rates between two countries for their currencies is also speculated. This market became more popular because it is very liquid. It is so because it deals in cash, which is the most liquid of all assets. The Forex Market involves commercial banks, central banks, commercial companies, retail forex brokers, and investors.
Understanding the Forex Market from a bigger and global perspective is known as Global Macro Trading.
This article aims to cover All That You Need To Know About Global Macro in Forex Trading.
About Global Macro Trading
- A global macro strategy of trading refers to a hedge fund or mutual fund strategy, in which the holdings of the users are based on the bigger picture of the economic and political aspects of different countries and their macroeconomic principles. These holdings refer to both – the long and the short positions in fixed income, commodities, currency, different equity and also the future predictions about the market.
- According to JP Morgan, a famous American Financier – “The Global Macro is an investment style that is highly opportunistic and has the potential to generate strong risk-adjusted returns in challenging markets.”
- Global Macro Trading involves making predictions and plans about large-scale events that take place at a global level or at a continental level. It includes providing investment opportunities to investors on the basis of macroeconomic and geopolitical factors. These future reports are made on the basis of factors like interest rates, political factors, national, international and foreign policies, international trade, currency exchange rates and many other factors. The global macro funds are one of the least restricted funds in the entire economical world. It is so because this trading can take place at any place and can be done by using any type of security so they are more flexible in those terms.
- There are three main types of global macro strategies – currency-based, interest rate-based, and stock or equity index-based. The different kinds of funds include discretionary global macro funds, commodity trading advisor global macro funds, and systematic global macro funds.
- Global Macro investors usually consider the status of the bank reserves of the countries and evaluate how well they are doing. If they are satisfied that the economy is going strong, based on the fact that the country’s reserves are healthy, then they would consider investing in that country through the Forex Market. If they find the reserves to be too thin or encounter that a country is hoarding money, or observes that it is not growing, then they would consider the currency to be weak in potential terms.
- Nowadays, almost all the major hedge fund and investment banks like Bank of America, Morgan Stanley, Citigroup, J. P. Morgan, etc. have adopted Global Macro Investing in their trading routine, which shows its prominence and reliability in today’s times.
With all these facts and trivia about Global Macro in Forex Trading, you can understand the basics of the topic. You can use this technique for yourself as well. There are other details about this topic which can help you out.
But that would depend on how you are proceeding and what your investment plans are. You can choose the ways in which Global Macro can help you out in your Forex
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