DEFCON 3 is the DEFCON level where hostilities begin. No nuclear missiles may be fired or armed, but all other options are permitted; (fighter/bomber launch, attack mode for fighters and battleships, etc.). This is generally the stage where the most naval combat takes place, especially where deployment zones overlap (such as in the northern Atlantic, the north-west Pacific (near Japan), etc.). Submarine combat may take place, but frequently players wish to reserve them for a more strategic phase of the game.
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