Trend Following, Counter Trend, and Global Macro Trading
What do trend following and counter trend following have in common? They are both used by most traders. But as opposed to most investors, global macro traders use them as a very systematic part of their strategy. Most macro traders use mechanical as well as discretionary systems for both trend following and counter trend trading. This way they can more efficiently utilize their trading capital and generate even higher and more consistent and therefore smooth returns.
Think about it for minute. Are you always using 100% of you trading capital? If you are you are likely taking on too much risk. On the other hand are you using what you have left over efficiently? If you are always 30% in cash then you should try and find ways to put it to work. Of course you dont just do this blindly. Instead you make sure that the systems have solid risk to reward characteristics so that you are adding and not taking away from your returns.
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