“That is why I left. I loved the experience and it gave me the backdrop of the global financial markets,” Aronovitz says.
Aronovitz view of the global markets gave him an appreciation of forex markets. He could see how the fundamentals of currencies played a part in all asset classes.
“It is the all encompassing asset class,” he says, pointing out that if you have a commodity view you can express it through the commodity currencies, if you have a view on interest rate differentials or even equity markets, they all can be expressed through forex. “All of it being in one asset class I find very attractive,” he adds.
While trading was completely systematic the fund gave Aronovitz some discretion in executing orders once his entry level was hit. More importantly it gave him a global view of markets. Foreign exchange was a major sector traded and the global nature of the portfolio highlighted the importance of currency fluctuations on all markets.
His growing understanding of that influence led him to develop a fundamental view of markets. “I didn’t want to be just on the systematic side, I wanted to profit from a combination of fundamental and techncials. Now I focus on the fundamentals,” Aronovitz says.
After three years with Quest, Aronovitz was hired as FX portfolio manager and head of trading for Ronin Capital Management in 2005. There he developed his mainly fundamental short-term approach to forex trading. It is that strategy that he is now executing as portfolio manager for Miami based Gables Capital Management (GCM) and its Global Macro fund and GCM Global FX program.
He began trading the program, which has a positive double digit four-year track record, for GCM at the end of 2008. The program is up 7.53% year to date through October.
GCM has been managing money for 13 years focusing on equity and fixed income markets. Aronovitz provides exposure to currency markets and a short-term trading component.
Aronovitz looks at a broad global macro landscape and combines that with focusing on the short-term. “What will be affecting the markets in the coming week? Whether it is economic data, central bank releases, asset class correlations [or] sentiment in the markets,” he asks.
He trades G10 currencies, mostly crosses. He doesn’t execute carry trades but follows the carry trade in his fundamental analysis.
“I am not going to enter the trades based on technicals, If anything I am looking at exit points, where [are the] key support/resistance points to help me judge were exits might be,” he says.
He says the key is finding opportunities with strong risk/reward characteristics. “I look at everything and if three or four things are pointing to one currency moving in one direction, I put on a trade; if it is only one aspect and if there is economic data coming out in the next 24-hours, I won’t put on the trade or at least [I’ll] wait for the data to come out. I am always looking for optimal risk and reward opportunities,” he says.
His trades have an average duration of one to three days. He says this has been in advantage in recent choppy markets where central banks often try and influence currency values. “You will always see central banks jawboning. Nobody wants to have there currency unjustifiably stronger. In all these export led countries it is a big detriment when their currencies strengthen because it comes down to who you are going to buy these goods from.”
Aronovitz’s short-term approach and fundamental outlook allows him to be nimble in the increasingly complex world of forex.
