The military planning process offers powerful insights that traders can apply to improve their trading practice dramatically. This article looks at the powerful idea of the Concept of the operation.
The concept of the operation immediately follows the Mission Statement and Commander’s Intent, which lays out the critical tasks and purpose of any operation, and which serves to guide the overall plan.
The Concept of the Operation then takes the plan to the next level of detail and lays out implementing instructions that, if followed in a disciplined yet innovative manner, will help us achieve success. These include the description of phases of the operation, important incremental objectives and coordinating instructions that guide the relationships between supporting units.
Discipline guides units by identifying the boundaries they are expected to operate within. Inside of these boundaries however, commanders are encouraged and expected to exercise as much initiative and creativity as possible. This important balance between discipline and initiative is a large part of the art of command.
A trader could apply these ideas by having a tactical trading plan that laid out clearly how to trade different parts of the day, week, month, business cycle or in response to certain market events like earnings seasons, news events, earnings announcements, or the release of economic reports.
A trader’s discipline would be found in the asset allocation, risk management, and position sizing elements that prevent exploding your account, while creativity and initiative could be exercised in selecting the appropriate strategy for the current market conditions and situation, and in varying rulesets within controlled limits to achieve tactical advantages.
Coordination would encompass how your various trading techniques could be used with synergy to achieve better overall results than they achieve by themselves, but could also be expanded to include how you might employ a mastermind or trading tribe to cover each other’s blind spots because of the multiple perspectives available.
Achieving balance in planning, and recognizing the importance of and relationship between discipline and initiative can give an individual trader a decisive edge in the markets.