Tail Risk, Options, and The Global Macro Trader

By George Thiel

During tumultuous markets, the global macro trader often finds himself in lonely company. Instead of losing a lot or even most of his money the macro trader often finds that he has generated strong returns while most other trading styles have failed. Because of the macro traders penchant for risk it is important for them to practice sound risk management principles.

The first risk management tool that all traders, but especially global macro trader should use is that of position sizing. If you have not heard of position sizing then you are likely taking on more risk then you really should be. Some of the inputs for your position sizing algorithm would be things like probability of the trade working out, the maximum percent at risk in a portfolio, and other similar factors.

Once you have determined the right position size, or amount to risk on a given trade it is now time to look at how you can structure the trade to maximize your risk to reward and to cut off tail risk. What is tail risk? Tail risk is a term used to describe risks that fall outside of a normal distributed curve. Essentially a tail risk is something like a bomb going off in a major city or the CEO of a company getting arrested for fraud. Anything that can absolutely destroy a position is considered a tail risk.

So one thing that is important is to consider tail risk. Tail risk is essentially risk that is always present and that is highly unlikely but not impossible. CEO fraud, natural disasters, terrorism, and the like are all events that would be considered tail risks. One of the fastest ways to cut off tail risk it to be a buyer of options. Whether you use calls or puts obviously depends upon the position but you can use options to better structure your risk and therefore have better risk management.

Options are very useful to cut off tail risk because they totally limit your risk while allowing for plenty of upside. In fact sometimes they provide a lot more bang for the buck then an outright stock position as they can have a lot of inherent leverage.

Just like any other trading strategy or security there are still risks. In fact there are two primary risks when using an options strategy overlay. The first risk is that you want to ensure that you are paying a decent price and not overpaying for your options. If volatility is high you may be paying far more then they are worth and mess up your risk to reward.

Another risk is that you need to ensure that you know your trading timeframe. If you are hoping to hold the position for several years then you will likely want to reconsider options. If on the other hand you are hoping to hold it for a few day up to a year or so then options may very well be your holy grail.

Ensure that when you are trading that you look at al the available ways to express your market view. By doing this you will often use options and in so doing improve your global macro trading results. - 23218

About the Author:

If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro investor advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.

Hector Trader Forex Trading Course Review - Taking a Closer Look at Hector Trader

By Antony Adam

Hector Trader Forex Trading Course (3SMA Forex System) was developed by, you guessed it, Hector. A professional forex trader. He has put together a straightforward forex trading home study course aimed at beginning to intermediate forex traders. The system is trend based and momentum driven in nature. Hector is all business and passionate about teaching forex trading the correct way.

This forex trading course is hands on and by no means mechanical. There is no set and forget software involved like FAP Turbo or Forex Boomerang as you will actually be taught to read charts and react to what they are telling you. More importantly, you will learn when and why to trade a particular currency pair as well as when and why no to. So with that said, prepare yourself to put in some time and effort. This is far from the over hyped, make $2 million in a year type forex trading strategy. Hector Trader is a forex education that should serve you well.

Being able to spot trends in currency pairs is a hallmark of the 3SMA Forex System and is Chapter 1 of the Hector Trader course. The good news is, Hector will give you this all important first chapter video free of charge. This gives you a good opportunity to have a peek inside the course to determine whether or not it suits your needs. One word of warning, Hector speaks quickly and is sometimes hard to understand. After listening for a short while youll be able to keep up with him.

Hector also covers how to find and profit from brakeouts within a trend. Where and how to place stop loss and profit target points, as well as the all important money management rules. Also covered is the London open brakeout strategy that is similar to The London Forex Rush System. This is in essence an intra-day forex strategy that deals with the high trading volume and momentum created when the Tokyo forex session ends and the London forex session begins. Its well known that the first two hours of this session can be very profitable if you know when and where to look. In fact, there are many professional forex traders who specialize in this strategy alone.

Hector also includes a MetaTrader 4 custom indicator as a bonus. This indicator spots trends in different time slices and the Hector Trader course will teach you how to profit from it. You dont need MT4 to put the Hector Trader strategies to use, but will if you want the custom indicator to function. MT4 is a free download, so its not a big deal.

Is Hector Trader worth buying? Ive only touched on a few things in this forex training course. There is much more contained in the 8 chapters, 60+ videos that amount to 17 hours of instruction. In the training videos Hector uses live trades to illustrate the concepts being taught. So this isnt just theory, its practical application of his methods. Hector also includes a custom Excel spreadsheet that helps calculate money management as well as track your trades. Hes also included his top 10 forex profitability rules to keep you on track.

The 30 day money back guarantee should give you plenty of time to set up a demo account with a forex broker and begin to put your education to the test to see if Hector Trader is for you. Many have reported being able to consume the training over a weekend and begin to apply the strategies immediately. But make sure you test, test, test with the demo account before real trading funds are committed. Theres quite a lot to this forex home study course for not that much money and you wont find too many people out there as passionate and committed about teaching forex trading the correct way than Hector. - 23218

About the Author:

To read more about this forex trading course, click here: Hector Trader Review

5 Forex Trading Tips To Keep You On The Go

By Bart Icles

If you are planning to try your luck in forex trading, you need guts, basic forex knowledge, and proven forex trading tips to help you get through successfully. Once you have developed a great combination of these factors, you will be fortunate enough to end up with a steady flow of income aside from the normal job that you have. Forex trading can be a very lucrative area of interest if you take the time and the effort to learn the tricks of the trade.

It is very important to devote your time in researching about all the facets of forex trading. Researching about forex trading will make you familiar with the different terms or jargons being uses in the forex market so as not to make you an ignorant trader. It will also give you an idea just how big a financial market the forex market is. Ever since the forex market was born and people and corporations started putting high stakes in it, its growth has been regarded as one of the most phenomenal. And to be able to learn the workarounds of the forex markets, equipping yourself with a handful of tried and tested forex trading tips will prove to be invaluable at all times.

Here are some forex trading tips to keep up your sleeve at all times:

1. Before you take the leap and deal with actual money, you should start with a dummy account first. This is very helpful for anybody since it will help equip you with forex trading strategies that you can use come the time that you decide that you are ready for the real thing. Not only will practicing this make you not lose a lot when doing real forex trading, it can also help you win at all times as soon as you are able to develop a workable forex trading strategy of your own.

2. Make sure that when you are dealing with the real forex trading thing, you do not get overwhelmed and become too gutsy. You will lose your hard-earned money, big time. You should keep in mind that forex trading is not your usual game of blackjack or poker wherein at times, out of frustration, you gamble all your money, falsely thinking that it will be doubled. You will end up losing everything eventually this way. Self-control is of utmost importance.

3. Once you have a forex trading strategy developed, you should stick to it. 4. Learn how to interpret forex signals so that you can make the right calls. Only constant exposure and the right mentor can help you in this area.

5. During real forex trading, you should make sure that you log all your transactions so that you will be able to gauge real time whether you are losing or making money.

Forex trading can be something that you can live by. To make it work, you should not let it all get to your head. Stick to your plan and you will end up with the right calls most of the time. Have those forex trading tips up your sleeve all the time. - 23218

About the Author:

Using forex trading signals starts with a desire to learn and a drive to become a great trader. Learning to use a forex trading signal is a powerful technique, it takes a good teacher and mentor. But once you learn how to trade using them your life will change and you have options and financial resources you never had before.

Global Macro Investing Strategies Using the Treasury Yield Curve

By Hugh Thiel

There are many global macro investing strategies that make use of the yield curve. While primarily used to trade bonds, there are also several good uses for trading stocks and currencies as well. In fact as powerful as the yield curve is, there is likely a few yield curve strategies for every asset class out there.

So what is the Treasury yield curve? It is the curve you get when you plot out the yields on different maturities of Treasury securities. For instance if you take the ninety day Treasury bill, the two year Treasury bill, five year Treasury note, ten year Treasury bond, and the thirty year Treasury bond you will get a curve. Usually sloping upwards from the bottom left to the upper right of the plot area, it can also take several other shapes. It can be very inverted with the far right down at the bottom and the far left at the top, it can have seemingly random lumps, and it can shift anywhere on the plot area. Each of these shapes and slopes of the yield curve tell the global macro investor something differently about the economy and the different trading instruments available to you.

So how do you apply the yield curve to your trading? Well there are a few main rules of thumb. An upwards sloping yield curve is typically bullish for the economy and stocks, whereas a downwards sloping or inverted yield curve is typically bullish for bonds.

So why does it work? Why does it matter what direction the yield curve is? Well if the yield curve is steep, going form the lower left to the upper right it means that banks are highly incentivized to lend money and therefore spur growth in the economy by helping businesses and individuals spend money on expansions as well as spending in general. This happens because when the curve is upwards sloping banks can borrow short term at low rates from the government and lend at higher rates for longer periods of time to the public.

If the curve is inverted however business is usually about to slow down, rates will be lowered, and bonds will climb. This is because with the incentive of the banks to lend now gone they will throttle back and the spigots of available money run dry. In turn this forces the Fed to lower short term rates, the Fed Fund rate, in order to spur business growth once again. When they lower rates bonds inevitably go up.

Think of bonds and interest rates as a teeter totter where yields are on one side and bonds are on the other. If bonds go down, rates go up. If rates go down, bonds are going up. In a regular inflationary environment this is always the case unless there is a severe credit quality issue.

If this is the case then anytime you can forecast the yield curve to show when the Fed will be lowering rates you can jump on it and go long bonds, typically with little risk. At the same time whenever you see rates being lowered you can wait a while and then go long stocks.

Neither of these relationships works perfect every time so it is important to still use risk controls. In fact if you had gone long stocks in 2008 when they lowered rates you would have lost a lot of money, but more often then not this trade and the concept behind it work well. Look at the yield curve, learn from it, and apply it to your market forecasting toolbox. - 23218

About the Author:

If you need actionable trading ideas then check out The Macro Trader It is a weekly global macro investor advisory publication with frequent intra-week updates for time-critical analysis and actionable trading ideas.

Find out How to Compare Free Insurance Rate for your Auto!

By Guiscard Mathurin

If you are comparing free auto insurance quotes, then there must be many questions that come through to you. Here are solutions to few of them.

There are many reasons why people compare auto insurance. However, before you do that, you need to know what goes behind the scenes when companies give free auto insurance quotes. While comparing the free auto insurance quotes, please note the area that you live is a major factor that affects the free auto insurance quotes. If the area that you are living in has high number of crime & thefts, then the rate will shoot above the roof for sure. If you prove to the insurance company that you have parked the car in your garage & has installed an alarm system that might help you lower the quotes.

Getting the best rate is one of the main reasons for you to compare auto insurance. The Internet provides the best answer to compare auto insurance quotes. All you have to do is simply enter some important information and the quotes for you to compare auto insurance are ready. It has been noticed that if you compare auto insurance & study it well, it will surely be beneficial for you in many ways. And for those who compare auto insurance, and do it well, they save a lot of dollars.

Now, when you compare auto insurance policies, you do that with the free auto insurance quotes that you would have got, either online or over the phone. The key is " The source from where you get these free auto insurance quotes. If it is credible enough, trust you would get good quotes for your perusal.

There are many things you could do to get quotes for the insurance coverage. While some of them may seem time-consuming to you, it is important you spend this amount of time. At stake is " The best and the most affordable auto insurance coverage for your vehicle.

Saving money is one part of the deal, but you also need to ensure you choose a respectable company when you compare auto insurance. At the end of the day, the free auto insurance quotes will only tell you certain things, and credibility of the company is definitely not something it will tell. This is for you to find out!

Getting free auto insurance quotes is not a tough ask at all. All you have to do is log on to the Internet, and get some quotes from different websites. One thing you should avoid is getting quotes from the same company, else you would spend a lot of time to compare auto insurance and yet not get anywhere.

If you do the compare auto insurance activity well, you would realize how profitable the free auto insurance quotes are for you. For starters, you will easily be able to save at least hundred dollars on your insurance coverage. Not a bad incentive that! - 23218

About the Author:

When it comes to shopping for auto insurance, we all need the cheapest possible policy that we can find. Simply calling an auto insurance agent is not enough. We need to Compare Auto Insurance Quotes from multiple insurance agents online. By contacting different companies, you can be on your way to reduce your Auto Insurance Rate in no time.