Global macro hedge fund managers on average are the most successful hedge fund managers out there. Long short equity seems to get a lot of the attention but over time global macro has proven to be the number one hedge fund strategy according to the available data, some of it going back to the early 1990′s
So what makes these global macro hedge fund managers different from everyone else in the hedge fund industry? One word is futures. Many of the best and most successful global macro hedge fund managers started of trading futures. Managers such as Paul Tudor Jones, Bruce Kovner, and Louis Bacon all started out trading very leveraged contracts. This same leverage forced them to learn all about risk and approach trading from a far more risk managing side then your typical mutual fund manager who decides to get into hedge funds.
Risk management as anyone who trades successfully knows is one of if not the most important aspect of trading. If you always think that the world is on a buy signal the you will look at your positions differently and always give them the benefit of the doubt instead of being skeptical and cutting your losses. Why has Paul Tudor Jones done so well and Bill Miller is still almost done? Because Paul Tudor Jones focuses on risk.
This focus on risk allows the best hedge fund managers to look at everything as a risk to reward proposition and not as some great company or great research report. In the end if the market does not agree then the manager will dump the position for a minimal loss instead of holding on to a loser. As hard as it is to believe this is what has separated the best hedge fund managers from everyone else, the ability to cut losses quickly. Cutting losses is the one thing that makes ego filled managers lose and humble managers to win. Yes, some of them are billionaires but when it comes to being right or making money they will take making money everyday of the week.