Position Management

Hey Traders!

   In this post I am going to go over a bit of my typical position management technique, and I what I believe best suits global macro trading.

  Global macro trading is considered to be more of a medium-term strategy. In other words, very rarely will I hold a position for less than a couple of days, and rarely more than 3 months. Obviously, with certain trades, this does not hold true. Occasionally, a trade will last a day, or even a year, but those trades are rare.

  You'll notice that I will typically enter a trade, add or cut back on positions, on a regular basis. This is because, although my major trades may be longer term trades, I always manoeuvre around my positions as the markets are constantly changing. In other words my position management style is having a core position and managing around that position using a managed futures approach. For example, I may have the opinion that the gold market will be higher 3 months from now, so I may build a position either by scaling in, or enter full size right away. I do not only scale in as it goes against me, I also scale in as the market confirms my trade. This allows me to capture a better price, as the market is constantly probing different areas. If I enter full size immediately, I will always be looking to trade around my position. So back to the gold example. Say I purchase a full position, and a week later gold rallies into resistance. I would then sell some of my position to limit risk, take profits, or as a speculative trade if I think gold is going to go lower over the next couple of trading days.

  In other words, gold will not just go from point A to B without price discovery and market rotation. So although my main core position will make the most money in the end, trading in and out of my position can make me even more profits, or save losses.

 In an entire trading year, there are typically very few large macro moves (moves in markets based off of large economic pressures and discrepancies), however there are hundreds of rotation opportunities. Trading the natural rotation can be profitable, however a great year is made when one of the macro moves is caught. Combining the two together, in my opinion, creates a winning management strategy.

Hope this helps!

Julian