chapter 6 electronic trading tactics

Webster's defines the word tactics as "the action part of a plan," "the

science and art of disposing and maneuvering forces in combat,"

and "the art or skill of employing available means to accomplish an

end." All three definitions apply to trading and aggressive investing.

When you shorten the time frame of trading, you automatically pit

yourself against the best traders in the world. Day trading and

microtrend trading can only be described as war.

Most battles are won or lost in the preparation stage, long

before the first shot is fired. It is important to anticipate your opponent's

actions and reactions. Trading is high-tech warfare. Your

opponent is a well-armed, seasoned, battle-hardened veteran of

many campaigns. Never underestimate your opponents. Learn from

them. If you hope to defeat a superior opponent, you must use cunning

and superior tactics to emerge the victor. Why do so many

traders and day trading cowboys insist on shooting from the hip?

Yes, you might get lucky one or two times, but in the end it is the

marksman who knows and understands tactics and the art of war

who consistently hits the target. Remember, if you are not the

marksman you are the target. You must be the general—the com138

the strategic electronic day trader

mander of your money. Each time you place a trade you are marching

into battle. Winning generals protect their soldiers and commit

them only when the probability of success is high. If the battle

begins to go against them, winning generals pull out their soldiers

to fight another day. How can you identify superior financial generals?

They consistently make money and protect their capital by cutting

losses quickly. In the following pages, you will learn the

preparation and execution of electronic trading tactics.

Webster's defines the word tactics as "the action part of a plan," "the

science and art of disposing and maneuvering forces in combat,"

and "the art or skill of employing available means to accomplish an

end." All three definitions apply to trading and aggressive investing.

When you shorten the time frame of trading, you automatically pit

yourself against the best traders in the world. Day trading and

microtrend trading can only be described as war.

Most battles are won or lost in the preparation stage, long

before the first shot is fired. It is important to anticipate your opponent's

actions and reactions. Trading is high-tech warfare. Your

opponent is a well-armed, seasoned, battle-hardened veteran of

many campaigns. Never underestimate your opponents. Learn from

them. If you hope to defeat a superior opponent, you must use cunning

and superior tactics to emerge the victor. Why do so many

traders and day trading cowboys insist on shooting from the hip?

Yes, you might get lucky one or two times, but in the end it is the

marksman who knows and understands tactics and the art of war

who consistently hits the target. Remember, if you are not the

marksman you are the target. You must be the general—the com138

the strategic electronic day trader

mander of your money. Each time you place a trade you are marching

into battle. Winning generals protect their soldiers and commit

them only when the probability of success is high. If the battle

begins to go against them, winning generals pull out their soldiers

to fight another day. How can you identify superior financial generals?

They consistently make money and protect their capital by cutting

losses quickly. In the following pages, you will learn the

preparation and execution of electronic trading tactics.