Trading Big Picture Themes Requires Different Approach, Strategy
• The evidence of a thematic 'risk aversion' shift in global markets is growing
• Themes like risk trends and monetary policy changes rarely play out in a single moment
• Early adoption, false starts, flexible technical levels and more in big picture trading need to be accounted for
When we trade around event risk or on the basis of definitive technical patterns, our approach can be precise and timing measured. Yet, when we trade on big picture themes that are both vague but offer tremendous potential, the conditions are very different. Changes in global sentiment, a general alteration in monetary policy bearing, shifts in participation and other systemic developments in the financial system can represent enormous moves in markets. Yet, they can also play out in a piece meal fashion with conviction slowly solidifying and full capitulation not coming until the markets are careening. Currently, risk aversion seems to be gaining serious traction across global equities and among the Yen and Euro crosses. This ever-present force has undermined other asset classes some time ago, and many false starts for these particular benchmarks have occurred over the months and years. How do we trade such an imprecise subjects? That is the focus of today's Strategy Video.
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