By Griffin Cooper
Laconic management is a technique that emphasizes brevity and clarity in communication. It is a style of management that is often associated with military leaders and is based on the ancient Greek city-state of Sparta. The Spartans were known for their concise and direct communication, and this approach has been adapted to trading the markets.
As traders we need to make quick decisions in a fast-paced environment. By focusing on brevity and clarity we can cut through the noise and make informed decisions based on the most important information.
One of the best uses of the laconic management technique I have used in my own trading is simplifying my ruleset. I have often had a struggle of values with trading rulesets where one part of me wants to have complex rules with a contingency for every plan. And the other part wants to have simplified rules that might not have every scenario mapped out, but because of the simplicity of them my effectiveness in execution can be almost flawless. The psychological benefit of being able to execute a ruleset perfectly really can’t be overstated. And this has allowed me increase span of control very easily when I take the approach of an ‘easy peasy’ rule set.
Once we get to positive expectancy and have a positive equity curve (no small feat!) in our trading, it’s natural to look for ways to increase span of control and trade more symbols. If I have an expectancy of 0.2R per trade and am taking 10 trades a week then I can expect to make about 2R per week (0.2R/trade * 10 trades). If I can increase my span of control to trading more symbols and get 20 trades per week I can double my weekly R capture. The catch to this kind of strategy is that I have to be able to follow my rules and continue to avoid mistakes while increasing my span of control.
Simplifying my ruleset can be a very effective way to increase my span of control so I can trade more symbols or take more trades in my trading sessions without getting cognitively overloaded. One way I’ve found to simplify my ruleset is to adopt a simple trailing stop exit strategy. If I’m using a complex exit strategy with many different types of exits, I can reduce that to a simpler exit so that I don’t have to think as much about each exit. I’ve found this to be very effective for intraday trading when I have more of a ‘take’em when you can get’em’ mentality.
One of the best months I had was when I used a simple trailing stop exit. I trailed with a 1R risk box, and then moved my stop up to 1.5R when the price reached 2R. If it got to 2.5R I resumed the 1R trail stop. That was it.
Because the exit was so simple, I was able to take more trades than I had been taking previously with a more complicated ruleset. My trading process was reduced to stalking for the pattern I was trading, then executing the entry with a trailing stop at the same time. When I entered my position, I would set an alert at 2R so I could move my stop up to 1.5R to lock in the gains. Then I’d just set an alert or hang out at the screen for a little to see if price made it up to 2.5R and then I’d put back in my 1R trail stop. That was it, there was nothing else to do for the exits since the trailing stop took care of itself. With all the mental load of exits offloaded to the trail stop I was able to really time my entries well and got some great trades while also increasing my span of control considerably.
Applying Laconic Management Techniques for Exits:
1. Simplify exits to a 1R trail stop.
2. When price reaches 2R move stop up to 1.5R to lock in gains.
3. Resume 1R trail stop when it reaches 2.5R.
4. Repeat, and enjoy the freed up mental energy.