Strategy and Tactics.

Dr Brett Steenbarger, writing in traderfeed.blogspot.com explains the concept of Strategy and tactics in Trading.

He writes: “Many trading problems–and misunderstandings–result from a confusion between trading strategy and trading tactics.
First let’s talk about Grand Strategy. Grand Strategy frames our most important values; it expresses our broadest aims and thus guides the specific strategies that we follow.”

To realize its Grand Strategy, the business must engage in a variety of smaller Strategies.
The way the business implements its Strategies is through Tactics.

For a Trader:

“The Grand Strategy of a trader represents his or her fundamental way of viewing markets and edge in the marketplace. Trend following is a Grand Strategy, as is mechanical systems trading, Elliott Wave trading, order flow trading, or trading day structures from auction theory. A trader’s Grand Strategy captures how he or she views markets and defines opportunity. ”

The trader’s Strategies will define how he or she finds opportunity in the present set of market conditions. For example, my Strategies as a portfolio manager might be to buy dips in the stock and commodities markets because I view this as a cyclical bull market. The strategy will change as my perception of the market changes.

Brett says: “When it comes to Tactics, I as a trader will be even more flexible. …. my Tactics could lead me to add to positions on a pullback in the stock and commodities markets.

The conclusion is:

Many traders fail because they jump from Tactic to Tactic, without a clearly formed Strategy and without an overarching, guiding Grand Strategy. They are focused on setups, not ideas.

My Notes: All of us should do this exercise – What is my Grand Strategy ?  What are my current strategies to implement the Grand Strategy, and, What are the tactics I am using in recent trades. If you feel comfortable, please share your ideas.
Cheers.