Tactic or Strategy?

[BlueHorseshoe 10]

A few weeks ago another TL user suggested to me that I would do well to focus my attention more on 'tactics' than on 'strategies'. Reading an old floor trader book the other day, an identical point was made by the author.

 

I was wondering what others on here make of this distinction?

 

Do you have 'tactics' that you deploy in your trading, and how do they differ from the 'strategies' you use?

 

What do you think the term 'tactic' means in trading?

 

BlueHorseshoe

[Patuca 13]

I would see the strategy level as things like countertrend trading or trading with trend. Tactics would be "how" one actually implements countertrend trades or trades with trend. Tactics are the techniques. The entry and the exits..etc..

[fast 10]

.

  BlueHorseshoe said:

A few weeks ago another TL user suggested to me that I would do well to focus my attention more on 'tactics' than on 'strategies'. Reading an old floor trader book the other day, an identical point was made by the author.

 

I was wondering what others on here make of this distinction?

 

Do you have 'tactics' that you deploy in your trading, and how do they differ from the 'strategies' you use?

 

What do you think the term 'tactic' means in trading?

 

BlueHorseshoe

 

Tactics are narrower in scope than strategy, tend to be me more detail oriented, and bring an added layer of precision. For example (and this is only an example), if you use a full stochastic indicator, then (and in conjunction with other tools) you might look for buying opportunities when %K enters into the oversold area. Then, you might wait for %K to change directions before being triggered into a trade. Next, you might place a buy stop one cent above the candle that caused %K to change directions.

 

This could be a tactical advantage that you have compared to others who follow the very same strategy you have--which might be to swing trade only on the first three pull backs of a upward angling 30day sma trend.

 

Within the same strategy, you might have other tactics you use as far as money management goes. Joe Blow sells after he has a 30 tick increase; you, on the other hand might use a scale out approach (1/2 after 25 ticks) and (1/2 with a two bar trailing stop). If someone is telling you to be more tactic oriented, I'd take that as you should be more concerned with the specifics--the nuts and bolts of how you're gonna execute your trades.

[Predictor 11]

This TL user may have been me -- as I thought of this idea a bit.

 

Tactics define how you carry out a strategy. For example, your strategy is your overall intention "you think the market will go down". The tactic is how you carry out that intention. Do you just run out and short the entire market? Do you short a specific sector? Do you go long the market and short a basket of stocks? Do you wait for a pullback? Once in the trade, what size stop do you use or how do you know to get out? These are tactical questions.

 

Tactics in my opinion are all about increasing your reward when right and/or minimizing losses when wrong. Good tactics can't make up for bad strategy but a good strategy can fail due to bad tactics.

 

Another similar concept to tactics is "execution". Execution embodies the idea of how well you can actually implement your concept. Its how well you actually trade. A lot of what I train to do is execute at a high level via my tape reading skills. In this style of trading, I take a much different view of the market then most others. A lot of traders are all about waiting on the "setup" or a great opportunity but execution trading is all about taking every single opportunity and recognizing which ones are working to push them while taking small losses or break evens on the ideas that don't pan out.This style of trading requires a high level of performance. For that reason and others, I always have a daily loss limit and other "checklists" such that I cut back when I'm not trading at my best.

Curtis

Blog - The Market Predictor

[onesmith 10]

It's good to write lots of strategies. The more the better.

[Obsidian 10]

  BlueHorseshoe said:

...What do you think the term 'tactic' means in trading?

BlueHorseshoe

 

I think tactic is a part of your strategy (the way to profit).

As Predictor said "the tactic is how you carry out that intention". It is your style.

[SIUYA 11]

a bit silly really, but my strategy is to make money....or is that my mission statement

.....I guess the tactics are the execution part ---- eg; do I buy a break when bullish, or buy dips.....

eg; today EURUSD, strategy was to remain bearish, sell rallies, did well on the down tick, but i had no strategy today to go long -- so I did not and the rally that I did not anticipate and hence did not participate in would have been good if i had a different strategy ready to apply different tactics.

 

.....so long as the mission statement is intact

[philipwade 10]

The trader's Strategies will define how he or she finds opportunity in the present set of market conditions. Tactics may lead to take profits in stocks right here, even though I think we'll be headed for new price highs in the weeks ahead.

[onesmith 10]

The edge within studying a sweet spot or correlations observed in an optimization report (especially of profit target, stop loss or stuff that requries a length input) is miniscule. Is that a wild baseless claim? ...or one of many amusing results of walking the path I talk about? I'm not incompetent. My skills at observing the things others are capable of seeing in a performance report are within the top ten best that 99 percent of TLab users will ever have an opportunity to dismiss.

 

Strategy implies a format that generates a performance report based upon buying and selling. There's no tactical advantage inherent within the activity of writing a strat. Strats follow a format but otherwise their probability of being profitable is random. If it's not random then that strat contains a tactical advantage or edge. When optimizing a true tactical advantage it's reasonable to anticipate and expect it to be viable across the spectrum. Not just a sweet spot.

 

How many readers besides BH ( lol but j / k ) want to optimize the sweet spot between the stop loss and profit target for another month and proudly claim that activity or some other nonsense is a tactical advantage? How many readers believe a tactical advantage should be profitable for all values of length from 10 through 200 (or whatever the spectrum is minus initialization requirements or other tangible_intrinsic thresholds or reasons for excluding)?

[BlueHorseshoe 10]

  onesmith said:

How many readers besides BH ( lol but j / k ) want to optimize the sweet spot between the stop loss and profit target for another month and proudly claim that activity or some other nonsense is a tactical advantage? How many readers believe a tactical advantage should be profitable for all values of length from 10 through 200 (or whatever the spectrum is minus initialization requirements or other tangible_intrinsic thresholds or reasons for excluding)?

 

I couldn't have described better for myself the way that I perceive a tactical edge to differ from a strategy.

 

Although my programming skills and experience may be no match for yours, Onesmith, I rather think that your joke discredits me - my understanding of effective development processes is certainly beyond "optimising for sweet spots", and I can't remember the last time I viewed an optimisation report.

 

Of course, if you want to continue believing that I spend all my time optimising inputs, then feel free . . .

 

BlueHorseshoe

 

ps. in the meantime - do you know the answer to my bidsize question in the EL forum?

[onesmith 10]

My intent was to inspire you, not to discredit you.

 

value1=bidisize(1); // returns an error

value1=bidsize(some combo of letters); // returned an error

 

It's possible I used the wrong combination of letters but I believe it's a typo where a macro appended ( ) to all the reserved words in the help file and individual reserved words haven't had that initial seeding effort edited to reflect the precise usage for each specific word. The old dictionary shows it as without ( ). Just the OO dict that includes ( ).

[BlueHorseshoe 10]

  onesmith said:

My intent was to inspire you, not to discredit you.

 

value1=bidisize(1); // returns an error

value1=bidsize(some combo of letters); // returned an error

 

It's possible I used the wrong combination of letters but I believe it's a typo where a macro appended ( ) to all the reserved words in the help file and individual reserved words haven't had that initial seeding effort edited to reflect the precise usage for each specific word. The old dictionary shows it as without ( ). Just the OO dict that includes ( ).

 

Maybe 'discredit' was a strong word . . . It was a comment from you a month or two ago that originally prompted me to consider the tactic/strategy dichotomy, and convinced me that I would be unable to wring any further significant value out of the kind of optimisation saturated approach I had hitherto adopted.

 

Thanks for the easylanguage info. Is there any way to peer deeper into the order book with EL - for instance to return the bidsize at the current best bid minus 1 tick?

 

BlueHorseshoe

[onesmith 10]

If there's a way to access the order book I will find it.

[onesmith 10]

code editor .. select Help, EL Object Reference.

 

then from the object reference .. expand Components, select MarketDepthProvider class, expand Example, import eld.

 

Line 12 in the editor indicates a default value of 1 for an input named index is calibrated to 1 level away from bestbid. So 1 is actually displaying level 2 because bestbid is level 1. If you insert 2 instances of this on an intraday chart and change the input to 5 on just one instance then you can expect it to match levels 2 and 6 on the matrix or another form of market depth.