STRATEGIC PARADIGMS The classical model of strategic and tactical development used by martial strategists can be seen in sidebar Figure 1. Many traders use something similar without realizing it. The flow from one section of the paradigm to another can go both ways; this means the structure is flexible, but it also means that there will be a lot of room for subjective interpre-tation. Further, it is left to the discretion of the user of this paradigm to decide what constitutes strategy, operations, or tactics. In general, stepping away from the metaphor of chess and into one of war, one might consider strategy as a viewing of the map of the battlefield, operations as the positioning of forces on the battlefield, and tactics as the final attack. Gray areas in the first paradigm can cause problems in a market environment. In the second part of sidebar Figure 1, we have re-formed the paradigm under strategic guidelines more suited to trading. This model builds from an initial point of strength (statistical edge). The logic flows naturally through the model, accumulating added advantages. The model will not allow a trade unless the strategic guidelines have been met and a tactical advantage exists. |
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