We are giving you the link for your weekend reading .
“THERE ARE ROADS WHICH MUST NOT BE FOLLOWED, ARMIES WHICH MUST NOT BE ATTACKED, TOWNS WHICH MUST NOT BE BESIEGED, POSITIONS WHICH MUST NOT BE CONTESTED, COMMANDS OF THE SOVEREIGN WHICH MUST NOT BE OBEYED.” SUN TZU ART OF WAR VIII.3
Why does SUN TZU go into such detail here about what NOT TO DO? Is it just semantics? I think not. I believe SUN TZU is wanting his listeners to know that in battle patience is just as important as the attack itself, if not more so.
Th quote above is taken from the chapter entitled VARIATION OF TACTICS, which, in military terms, refers to the techniques for using a combination of weapons in various situations for defeating the enemy. One of the general’s, and the trader’s, most effective weapons is patience. Simply put, there are trades that should not be entered, stocks that should not be traded, markets that should be left alone, areas of strong defense that should not be challenged, and restrictions placed on the commander himself.
THERE ARE ROADS WHICH MUST NOT BE FOLLOWED
There are trades that should never be taken no matter the set up. If your trade decisions are based on technical analysis as mine are, you patiently wait for the trade to set up, then you enter the trade as planned. When you are given a signal you trade. However, there are times when you are given a signal and you decide to patiently wait for the next signal. Why? Because the proper use of tactics implies a combination of weapons. Profitable trading systems are not designed to work in a vacuum, which can help explain why a handful of traders can take just about any trading system and make money whereas most others consistently lose money trading the same system! The successful trader knows that factors other than the technical contribute to the success of their system. These factors include knowledge of the following: the general market condition (TERRAIN), the strength of the sector traded, the upcoming major market moving news events (such as FED statements, economic announcements, etc.), and the earnings date for the stock you trade, among others. We should all patiently wait for our set-up with the understanding that the set-up itself may have to wait. There may be dead ends but there are other roads to take.
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