Published On: Wed, Feb 6th, 2013

10 things traders can learn from the sniper


In a recent article, “10 Front-Line Tips From Our Elite Shooters,” Staff Sergeant George Reinas, an instructor for snipers in the United States Armed Forces, detailed ten tips, “…his accuracy secrets…,” for “elite shooters.”  Each has something to offer for traders endeavoring to be the best at their profession.

10.  Collect Data: Staff Sergeant Reinas states that, “The most important aspect of being on the range is not to shoot but to collect data on the rifle.  We record data with every shot, so we know what our gun will do under every condition.

The same is true for trading any investment vehicle.  There is no such thing as a hunch, or “playing the market.”  Like Warren Buffett said, if you do not know what you are doing, the stock market is an expensive place to find out.

Collect data so you know what you are doing as much as possible.  Profit from the mistakes of other traders who are poorly prepared.

9.  Shoot Dirty: Snipers prefer a rifle that has fired 200 to 300 rounds.  “Snipers prefer to shoot dirty guns.”

Don’t trade until you have established a solid data position for all market conditions.  You want to trade based on the confidence of your skill set and equipment.  To establish that, you must execute your transactions first and hone your trading system.

8.  Squeeze on the PauseBefore shooting, Staff SGT. Reinas likes to “…take three breaths.”

For traders, establish what the current conditions are in the market.  Do not execute your entire position all at once.  See what the market is doing with series of transactions.  Do not commit yourself until you are in a comfortable position of knowing how the market will react to your trade.

7.  Follow Through:  But what many don’t realize is that follow-through is everything.  Once the shot breaks, continue that squeeze to the rear and then release the trigger slowly to the front.”

The follow-through on your trade is critical.  You want to mask your intentions if it is the first of many transactions.  Plan for the exit point.  Determine at what point you want to sell or cover your position.

6.  Zero to a Higher StandardSnipers will not settle for anything less than the highest standard of accuracy.

Traders should accept nothing less than best in quality that can be afforded for everything.  There is nothing more expensive than a poorly equipped trading operation.   High velocity traders spend incredible amounts of money to have the best equipment possible which results in a competitive advantage that produces massive profits.  Accept nothing less than the best that you can afford for your trading efforts.  Rest assured that your competitors will not.

5.  Get Out of SightA sniper does not want to have their intentions revealed.  When that happens, the sniper is a lonely, inviting target in a very hostile environment.

That same is true in the financial markets.  Never does a trader want to be exposed.  Having to unwind a position is a very costly undertaking.  Front running will destroy your profit potential for every transaction.

4.  Study the Wind:  The wind is never constant.  There can be multiple wind directions and shifts between the sniper and the target.

Study the market.  It is always changing.  Collect as much data as possible to be in the best position possible to make a profit.

3.  Know Your Bullet:  Different bullets perform differently under different conditions.  Snipers need to “find the best bullet for your firearm.”

Traders need to understand which transaction works best.  It could be an opening gap trade…maybe a capture-the-dividend transaction…possibly arbing a takeover bid…recognize what your best trading style is and deploy it under the most optimal conditions for maximum profits.

2.  Learn from the Kick“Every time sniper shoots he wants the gun to come straight back into him.  The scope should fall right back on target-that means your fundamentals are perfect.”

As the old adage goes, the perfect trading day ends with all positions closed.  That may or may not be true for your goals and objectives.  But determine what your goals and objectives are to make sure that your trading is focused and true.

1.  Dial It, or Mil It?: Depending on the range and situation, snipers will engage quickly or consult equipment for the proper shot.  The situation dictates the preparation.

Traders need to react differently, too.  If a merger or acquisition is announced, there is no need to check the price-to-earnings ratio: jump in for a quick profit.

For a sniper, pulling the trigger is a matter of life or death.  For a trader, it becomes a profit or loss situation.  Either way, these ten tips put the odds for the most favorable outcome more in your favor.

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About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.