Profitable ETF Trading Strategies: Synchronizing your trading systems into an effective strategy
Achieving integration and synergy is a critical part of the military planning process, which has a direct connection to the task of trading successfully.
Military units achieve integration and synergy in a variety of ways that include phasing, control measures, decision criteria, a synchronization matrix and rehearsals. Each of these can be a great help to a trader looking to improve performance.
Phasing: a trader should identify time frames for trading that have a clear beginning and an end, and within which he identifies appropriate strategies, purposes and objectives that are specific to that time period. Some times phases are driven by events, and sometimes they relate directly to times and dates. No matter what distractions seek to divert their attention, traders must be clear about what phase they are in, and what the success strategies are.
Control measures: these are reminders and/or decision aids that help remind a trader of critical events that are approaching, and the boundaries they must not cross. For a trader these could include, calendars, automatic reminders, key price levels for support and resistance, alerts to begin preparing for increases in volatility or market reversals. These must be visible and actionable (or audible/kinesthetic depending on the trader’s preferred learning style)
Decision criteria: are quantitative definitions of moments when we must be ready to act. This could include price levels that cause us to enter or exit a position, or to adjust a stop, to increase or decrease our position. It could be a combination of filtering or screening criteria that let us know we should be stalking in earnest or preparing our entry or letting us know when a window of opportunity is ready to open or close. The key is to have these reduced to the most important actionable conditions so that we do not fall victim to analysis paralysis.
Rehearsals are the way that good military units, and good athletes for that matter, become great. By creating conditions as close to the operational trading environment as possible, traders can experience as close to the actual decision environment as possible, so that in the moment they will be able to perform according to plan. Rehearsing a trading strategy with live money in a real market but at a reduced position size is an example of getting the rehearsal conditions as close to live trading as possible, and which is why I recommend it so highly.
Applying these 5 military planning concepts to your trading plan should help you achieve better execution of your carefully planned concept.