Good morning, tradersâŚ
Jeff here.
Weâre less than a week away from the election, and everyone is trying to figure out how each outcome might affect the marketâŚ
With such a huge political catalyst looming, now is the time to think like a macro trader.
Macro trading is all about understanding how big-picture events â like elections, interest rate changes, and geopolitical tensions â can impact individual stocks, entire sectors, or the stock market itself.
If youâve ever doubted the profit-making potential of macro trading, itâs time to pay attentionâŚ
Iâve been trading the stock market professionally for 25 years, and my edge comes from focusing on macro.
Itâs not about tracking individual stocks or watching for technical patterns â itâs about understanding how global events can shift markets in ways that few traders are paying attention to.
And donât just take my word for it. A recent research paper has proven just how valuable macro trading can be. It shows “Since 1961, the 44 days a year where there has been major economic news account for over 71% of aggregate equity market returns.”
In other words, the marketâs biggest moves come from just a handful of days tied to big macro events.
If youâre not following the macro story, youâre leaving money on the table.
Macro trading might seem overwhelming, but you donât need a PhD in economics or a Bloomberg terminal to start weaponizing it to your advantage.
Iâve spent decades trading global markets, and Iâm here today to show you four simple steps to becoming a macro trading mastermindâŚ
Step 1: Follow the Money
As The Wu-Tang Clan famously said, âCash rules everything around me.â
If you want to understand the global markets, youâve got to start with the U.S. dollar.
The dollar isnât just the worldâs reserve currency â it also sets the pace for the foreign exchange (FOREX) market, the largest financial market on the planet.
The Dollar is the backbone of international trade, and when its price shifts, it causes ripple effects across every other asset class.
Your first task is easy: watch how the U.S. dollar interacts with other major currencies, like the Euro, Pound, and Yen.
Pay attention to news and events that push the dollar up or down. A stronger dollar can make it harder for companies that rely on exports, while a weaker dollar can make U.S. goods cheaper for foreign buyers.
Youâll quickly see how this sets the stage for massive moves in stock pricesâŚ
Step 2: Interest Rates and Bonds
Next, letâs talk about interest rates and bonds, which are closely connected to the currency markets.
Itâs no secret that interest rate decisions â especially those made by the Federal Reserve â have a massive impact on the market.
Just think about the huge market swings weâve seen following post-pandemic interest rate cuts or hikes.
This is especially important to consider now as the Fed recently cut rates for the first time in four years.
If youâre not watching interest rates, youâre ignoring a major force driving market movesâŚ
And bonds are the key to understanding how interest rate decisions play out in real-time.
U.S. Treasuries, European bonds, and Japanese bonds are all interconnected with global interest rate policies.
When bond prices go up, it usually means that interest rates are expected to go down â and vice versa.
Paying attention to the bond market can give you a heads-up about where the stock market might be headed next.
Step 3: Commodities
Now letâs talk about commodities â raw materials or basic goods used to produce other products.
From gold to oil, commodities are traded around the clock, often reacting quickly to global events.
This is an area many retail traders overlook. But ignoring commodities is a mistake â theyâre a crucial piece of the macro trading puzzle.
Take oil, for example. Just recently, oil prices collapsed after Israel didnât carry out the major attack on Iran that many had anticipated.
Traders were bracing for a major armed confrontation. When it didnât happen, oil prices tanked, and energy stocks followed suit.
This shows how quickly commodities can react to geopolitical events and how that reaction spills over into the stocks youâre watching.
Other commodities like gold, copper, and agricultural products can also signal broader market trends.
Gold tends to rise during times of uncertainty, which is happening as we speak. The precious metal is up 30% this year, and I recently wrote about why I think this is happening.
Commodity prices are often early indicators of whatâs to come in the stock market.
Step 4: Look at the Big Picture
Once youâve got a handle on currencies, interest rates, bonds, and commodities, itâs time to step back and see the forest through the treesâŚ
The key to macro trading is looking at the market from a broader perspective.
Donât get bogged down in the day-to-day fluctuations of individual stocks. Instead, focus on how larger global forces push the market in one direction or another.
Ask yourself:
- Whatâs happening in the global economy that could impact the stocks youâre trading?
- Is the Federal Reserve cutting (or raising) rates?
- Are oil prices spiking (or tanking)?
- Is the dollar strong (or weak)?
These are the kinds of questions Iâm always thinking about in an attempt to anticipate big market moves before they happen.
Itâs about understanding how money moves through the global economy (and using that knowledge to your advantage).
So start paying attention to the macro story. The more you understand it, the better prepared youâll be to make smart, profitable trades around the election.
And trust me, once you start thinking like a macro trader, youâll wonder how you ever traded without this perspective.
Happy macro trading,
Jeff Zananiri
P.S. Speaking of the electionâŚ
TONIGHT, October 30th at 8 pm EST â Tim Sykes is going LIVE with trading prodigy and $13 million trader Jack Kellogg for an emergency election briefingâŚ
Over his career, Jack has doubled his money 28 times ⌠with trades as high as 626%, 832%, and even 893%.*
And tonight, Jack is ready to reveal a FREE election trade idea that could skyrocket no matter who wins on Tuesday.
Donât miss Jackâs FREE idea â Click here now to reserve your seat!
*Past performance does not indicate future results
