Many investors do not realize the plethora of different trading strategies that are used successfully by traders across the globe. There are more choices then just a day trader or a buy and hold investor. In fact if you look at the different hedge fund classifications neither of these even exist because they are not an actual strategy.
You can be a value investor that looks for businesses that you think the market is undervaluing. You can be a growth investor that looks for businesses that have rapidly accelerating earnings that you think have the ability to continue growing. Or you can be a GARP investor which looks for stocks where you are buying growth at a reasonable price. Of course we have only touched on stocks in the section and have totally left out the small cap and large cap classifications. But these are the classical types of investors that run most mutual funds.
Next up we have several other asset classes like fixed income, commodities, currencies, and real estate. There are a ton of different strategies and styles that only trade one asset class but there is also one strategy that combines the best of all worlds.
That strategy is global macro trading. A global macro trader does not wed themselves to just one strategy, instead they go and find the absolute opportunities from not only a reward standpoint but also from a risk standpoint. After all you don’t want to be swinging for the fences if the risk is a total loss.
Macro traders look at the investment landscape from the top down and try and figure out what type of economic environment we are in and how they can profit from it. They then drill down to the micro level to ensure that they are putting the trade on using the best instruments to get the highest risk adjusted return. Essentially the most bang for the buck.
By looking into the different strategies that are available to you, you will be better able to profit in different market regimes. Many people skip this step and it costs them dearly.