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Before You Take That Trade: Strategic and Tactical Questions
In clarifying my own trading principles, I came up with a list of strategic and tactical questions to ask before taking a trade. Most traders do not seem to distinguish between the two... which I think is a mistake. Strategy refers to context, while tactics refers to setup. To me, these are two sides of the same coin, and both are needed for good trading. Enjoy.
Strategic Questions (Context):
Is the market trending or in a range?
If it's trending, is it on the extreme or in a pullback?
If it's trending, has there been climax?
If it's in a range, is it on the edges or in the middle?
What would have to happen in order for the state to transition? (range to trend or trend to range)
Tactical Questions (Setup):
Is the context right for my setup?
Is my setup present?
How good is the setup? (positive factors vs. negative factors)
If I enter, does it have room to run at my RR ratio?
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
I think along similar lines, but also consider trapped traders....
Strategic Questions (Context):
Is the market trending or in a range?
If it's trending, is it on the extreme or in a pullback?
If it's trending, has there been climax?
If it's in a range, is it on the edges or in the middle?
What would have to happen in order for the state to transition? (range to trend or trend to range)
>>>> Where are the potential trapped traders and where do they feel pain if the market goes against them?
Tactical Questions (Setup):
Is the context right for my setup?
Is my setup present?
>>>>> Are their trapped traders exits inline with my setups entry locations?
How good is the setup? (positive factors vs. negative factors)
If I enter, does it have room to run at my RR ratio?
@iqgod , I'm curious if people think that one can be successful on purely tactical considerations (i.e. setups only). I think there are some traders out there who would argue yes... from their own experience. Perhaps the answer is that all good setups include strategic elements as well.
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
@Anagami I would argue that context is king and an emotionally fit trader would still be able to capitalize if he is right on context.
However a trader who sees head and shoulders in a bunch of candle bars which look more like cumulus clouds is seeing nails because he holds a hammer in his hands.
But again, it may work if he is deftly cutting losses and riding winners properly.
Nice. Thanks. I have a few monitors. And wallpaper made up of quotes that I can burn into my brain. I still have a couple monitors spare. I will put your quotes on one of them. That's exactly the thinking I need to manifest.
j/j