I wish I had the time needed to explain Game Theory or Rules of Engaging a Hostile Adversary.
My theory in watching market price action for years is that TRADING IS WAR.
I have been receiving a lot of flack when I make harsh comments on this and other forums, which I believe is unfortunate, as there is more to be gleaned from “tough love” that will make everyone better traders.
The capital markets are a war between buyers and sellers, who each want to take the others money. The stock market is rough, and if you don’t approach it with the disposition of an irritated general, you will lose. In the stock market, nice guys finish last.
What does the art of war and Forex trading have to do with each other? Well, the two are comparable in many ways. Soldiers fight the battle, but it’s the thinking and decision making processes of the generals and politicians that tend to win (or lose) the war. Similarly, traders require computers and fancy software to execute their trades, but it’s their ability to assess the markets and how well they execute their trading plan that results in profit or loss.
It’s best to think like a military to become more successful as a trader.
And I believe it would benefit the community here if we discussed this to help improve our performance. Below I have started a list of good tactics in this war we wage every day. Please list some other tactics or links that you think are important in this war, and I will add them here to the main list.
- Do not tell your adversary what your plans are
- Do not tell your competition what position / basket you are building
- Use everything to your advantage and interest
- Use psychology to strengthen your position
- Trust no one who isn’t on your team
- Never trust your broker unless you have mutually beneficial financial interests
- Build a strong hand, shake out the weak hands
(Identify the weak side and bet against it. Bet against fear)