STRATEGY WITHOUT TACTICS IS THE SLOWEST ROUTE TO VICTORY;

TACTICS WITHOUT STRATEGY IS THE NOISE BEFORE DEFEAT

David Cook recently wrote and published a book entitled Golf’s sacred Journey. It is a marvelous fictional account of a golfer who has talent, but is mentally lost. The book is now a movie. It should be part of your trading education; required reading for all those who are learning to trade.

I read Cook’s book some time ago and found it both compelling and enjoyable. The young golfer is on a mini tour trying to play his way to the PGA tour, and he finds himself in contention at a tournament. Things don’t go quite the way the player had hoped and he leaves the tournament sick, confused, and disgusted with his play. (Have you ever felt that way trading?). He then, by chance, comes across a rather unusual mentor named Johnny in a town called Utopia.

What the heck has this got to do with developing my trading strategy. Right. Be patient and give me a chance.

Johnny then offers to help this wayward pro golfer find his game. An unusual, but totally appropriate choice of words. The golfer reluctantly accepts, thinking that he has little to lose. The two meet at the range the next morning and after watching for a few moments Johnny asks the young man a question central to our analogy.

Why do you grip the club the way you do?

The young golfer thinks for a moment, looks at his grip, then replies I hadn’t given it much thought. it just felt right.

THAT IS COMPLETELY UNACCEPTABLE! comes Johnny’s quick reply.

Your grip is fine; It is your answer that is unacceptable.

What did Trevino, Nicklaus, Player and Palmer all have in common? Johnny asks.

The young golfer thinks, but their games were so different he is unable to come up with an answer.

The answer, Johnny says. CONVICTION!. He then goes on. Each golfer was quite different than the others in personality, swing, and approach to the golf course; yet each thought his method was the correct method. No. each KNEW that his method was correct.

I have played golf for many years. As I read this passage in Golf’s Sacred Journey I found it enticing. It seemed as if Johnny was speaking to me, not about golf, but about trading. In the story Johnny goes on to teach the young man one reason why so many young golfers fail. They continually switch methodology, grip included, in the hopes for success.

Think about that. A professional golfer changing something as fundamental as his grip. It may seem odd that a professional golfer would change something as central to his game as his grip, but they do. Each is looking for the answer.

How about you?

Do you continually change crucial central components of your trading. such as your trading strategy and tactics. because you are searching for the answer?

Maybe you find a better oscillator (one that worked last Monday), or a new mentor who hosts a trading room where you follow his ideas and approach, or maybe you decide to change products that you trade or hours that you trade them? Or maybe you change to using volume histograms, rather than bar charts? Has that ever happened?

Every champion has convictions, but perennial champions have convictions based on foundations. the first line of defense when facing adversity

David Cook Golf’s Sacred Journey .

YOU MUST HAVE CONVICTION WITH YOUR TRADING STRATEGY. YOU MUST KNOW WHAT IT IS YOU DO, AND WHY IT IS YOU DO IT.

You cannot and will not find success by changing your methodology and strategy every week. You must study, and try out differning tactics of course. But your success will come from finding a technique that most suits your personality and relying on it again and again and again. You must have conviction that this technique is the right one for you. That conviction will come from using it again and again, and understanding the intricacies involved in that particular approach.

So initially, yes traders will have to experiment (hopefully in paper trading accounts), but those experiments should be directed towards strategies and tactics that fit their personalities. Once a proper approach is found, one that fits you well, you must stick with it. Refine it, yes, but dispose of it. NO.

Now let’s go back to the questions I asked on the previous page. How do you trade? Why do you trade that way?

Do you know the answer? Do you have convictions in your trading methodology. On what are those convictions based? How can you be sure?

Maybe you trade only trend days, and on those days sell all rallies based on a 30% retracement, selling only after the down move restarts. Maybe you watch range bound markets and trade only with a break from balance, or trade only on the second attempt at such a break. Maybe you buy selling excess and sell buying excess based on price areas not revisted in a trading session. Maybe you have multiple time frames posted on your monitors and buy or sell only when all are in conjunction. Or maybe, just maybe, YOU DON’T KNOW WHAT YOU DO!

Whatever it is you do, the hard question is. Once you decided on your approach, did you test it? If not, how do you know it works? How can you be sure? If so, how did you test it and once you tested it on historical data did you analyze it on real time data as well? You have to convince yourself that this approach will work. If not, you will dispose of it after the first bad run (and bad runs will happen with any tactics).

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Traders need to treat their trading strategy and tactics just as a professional athlete might treat a vital approach to their sport. They need to have the conviction that it works, that the approach they are using is the best approach. That way, the temptation to change methodology will be less. Of course this does not mean that you should not continually assess your approach against new market conditions, of course you should. You might also test other ideas to see if they might perform better. But what you should not do is question your methodology mid-trade, if you have taken the time to develop conviction that the approach you trade is the right approach for you.

Learning to trade means learning to approach all aspects of trading as a professional. Approach your trading that way.

Test it, then rely on it and adhere to it. Or as Johnny would say: See it, Feel it, Trust it

Terry Lieberman developed a presentation on what he calls an anchor trade. It is well worth the few minutes in takes to read and review. It will be posted on the WindoTrader.com website soon, and when available, I will post a link here.

There are several options for backtesting. I will post a few below:

• ExcelTrader (free) click here
• AmiBroker 4.70, Stock Predictor 1.1.323, Seer, Market reflex 1.2, AnalyzerXL 6.1.26, TraderXL Pro 6.124, Ta4.net1.0, Downloaderxl 5.9.4, Dowloader SL pack 5.9.98 are all listed on the DataPicks web site and downloads are available there. Click here
• Stocks & Commodities has a web resource with a list of courses, seminars, data service, and software. Click here
• IQBroker also has a trading platform available here .
• Tradestation has backtesting of course as well. Click here

I have used Tradestation extensively and found it to work well, but it has a learning curve as, I suspect, do all of these systems.

Whatever it takes, find your strategy and tactics. Make sure they fit your personality. Develop conviction that they work (if in fact they do). THEN, stick with them.