Forex Advice – Forex Systems

Macro trading and the art of tactical asset allocation can be lumped into the same category. This is because they both share so many similarities. They are both trying to find the best values on the globe and in several different asset classes. The difference is that most global macro traders are aiming for absolute returns whereas tactical asset allocation is typically only looking for market beating returns and less then market risk.

Regular asset allocation will decide upon a fixed percentage of asset in each category and then rebalance once a year in order to keep the allocation the same. Global tactical asset allocators will instead look at the prospects for each asset class and then allocate. As things change they will then change the allocations. Essentially a tactical asset allocator is like a global macro trader because they will look for the best opportunities and then sale up or down as the case may be.

As you can see this is a lot like a global macro investor. Global macro is when you are looking at every investable asset class and trying to decide where are the best risk to reward opportunities.

One of the primary differences between global macro and tactical asset allocation is that most asset allocators will always be at least partially invested in each of their pre-selected asset classes. That differs from the global macro investor who will only go where they see a great opportunity now, and not 5 years later.

Essentially tactical asset allocation brings together global macro as well as traditional asset allocation in order to try and achieve market like or better returns with below market volatility. In fact over time one of the number one things that tactical asset allocation has done is to reduce risk. And as traders the world over know, reduction of risk can do wonders for your long term results.

As global macro investors we can profit from research done by tactical asset allocators because we can build the same models to help us determine where the best opportunities are and how they compare to other markets.

Combining asset allocation principles along with global macro strategies can help you in your investment results. The truth is that anytime you can do something to get a better grip on true value of an asset class and the potential return the better off you are. If you are into global macro then you are well advised to look into tactical asset allocation as well.