Global macro trading looks at major trends occurring on a country or global level. If this outlook is favourable, investors may buy assets that appreciate in such conditions. If the outlook is flat, they might choose to stay invested in cash or low-risk interest bearing instruments. If the outlook is weak, they may short assets that could decline. They may get this information from analysing economic indicators.
Macro investors may buy or short stocks, bonds, currencies, commodities, and exchange-traded funds (ETFs). For example, if a macro investor believes that the US economy is heading towards a recession and predicts that stocks may decline, they may start shorting a wide array of stocks or stock index ETFs.
While some macro traders may only look at the macroeconomic conditions of the country that they’re based in, some around the world take a global approach and may invest in, or short, the different assets in different countries. For example, if the outlook for India is strong, a global macro investor based in the UK may buy Indian stocks, and at the same time, may short stocks in Russia and sell the country’s currency if its outlook is weak, for example.