Tuesday, August 14, 2007

Know Your Enemy

"Know your enemy. You're at war. They outgun you. In head-on combat, odds are against you. You must redefine the rules of engagement. Go into the shadows, yours. Never play by their rules, on their battlefield. Fight an asymmetrical war with the insurgent's tactics. Play your game, by your rules. You must decide. Fight your way ... and you will win."
This is a great quote from Paul B Farrell’s recent article “Meltdown ‘inside’ Wall Street’s Brain". That article is not about Iraq. It is about your investing and trading future. The thing is that most investors still try to outthink the big houses. They want to find that one stock that the analysts have missed or find that interesting pattern that the quants haven’t uncovered. But guess what? Not going to happen.

Go into the shadows

For those who interact in the markets this way it's time to face reality and change strategy. “Go into the shadows”. Get small, get precise, get fast, and get out. There is only one thing you have over the big institutions: agility. They can’t move around 100 million at a clip but you can get in and out of 500 to 1000 shares pretty quickly. Know your edge and exploit it.

Trade-Ideas enables this kind of trading - with discipline. Trade-Ideas is your asymmetrical weapon. With the tools you can see the battle better than your enemy, giving you the advantage. They are bigger and stronger but you are faster and more nimble. Don’t go head to head, attack and retreat to fight another day.

1 comment:

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