Tactical Trading
Categories: Trading, Managed Funds
If you're a military general, planning your flanking maneuvers and whatnot, you have to excel in both strategic and tactical thinking.
Strategy represents the big picture ("we need to capture this port to keep them from importing supplies"). Meanwhile, tactics provide a way to get there. They're the short-term decisions you take in order to achieve the strategic goal ("we'll send the third division over the river first as a diversion, and then the rest of the army can get in position around the port").
Think of trading the same way. You have strategic trading ("I'm getting closer to retirement, so I'm going to lower my asset allocation in equities"). And you've got tactical trading ("there's a good market in corporate bonds now; I'll move some money in there for the next six months").
Tactical trading focuses on the short-term outlook. You're choosing the specific positions that will maximize your short-term returns. You move around as conditions change, reacting to immediate shifts in market trends.
Related or Semi-related Video
Finance: What is the Fast Market Rule?11 Views
Finance a la shmoop what is the fast market rule? okay things get crazy here [Two guys riding a rollercoaster]
whoa and every now and then there's a leap well blimey, that's how things work
here on the London Stock Exchange.....
the fast market rule accommodates the chaos by giving brokers and other market
makers the freedom to trade outside the ranges published to the exchange why is
this needed? well because we live in a world of robots and artificial
intelligence and fat thumbs that hit the wrong keys and hackers from Russia China
and Mars all of whom can profit from chaotic disruption if you want to see
this phenomenon in its finest form well check out Jack Nicholson in the original [Man stood next to Jack Nicholson as Joker]
Batman movie and that was the best one so the logic revolves around the fact
that today even with all our massive computing power we would still rather
rely on human beings when you know the congressman hits the fan then assume
that a computer will be clever enough to figure out what's wrong quickly you know
when the world is on a collision course with chaos all over the place fast [Meteor strikes Earth]
market rule, humans over robots...