Oh, cavalry are useful, though less so than in previous Total War incarnations. In ETW, you can use them in several ways:
1. Remember the old trick with cavalry that works in every Total War game? You know, you have your infantry engaged in melee with another unit, and you charge your cavalry into the rear? Yeah, that still works pretty well in ETW.
2. Another variation on 1 is to charge at a unit engaged in a shootout with your infantry. For the best results, set your cavalry at some safe distance from the flank of an infantry unit that is in a shooting contest with your line. Note that you should do this on the enemy's flank, because you don't want to soak stray musket balls from your own troops. When your line fires its last volley before a reload, charge. Soon after hitting, either get out, or charge your line infantry at the unit. It's less effective than 1, but it still often works.
3. Take out their artillery. Others have mentioned this, but cavalry are pretty decent at eliminating unguarded artillery, and the AI is pretty good at leaving artillery unguarded. Take the long way around, though, because artillery likes the bigger cavalry targets. The very best at this are dragoons, since you can maneuver around the artillery and then shoot them without taking casualties.
4. Take out light infantry. Unless they've deployed stakes, light infantry (including the dreaded Native American Bowmen) are vulnerable to cavalry charges. Since they're usually deployed on the flanks or rear of an enemy force, they're typically exposed, too.
5. Beat up moving infantry. If you use a quick charge and retreat, you can do significant casualties to marching infantry. If they're standing still, forget it, though.
6. Make the AI do something stupid. The AI likes to do several stupid things with your cavalry. If it gets nearby, they'll put their infantry into square formation. Let them, and then shoot them up with ranged weapons. They also like to send a unit or two of infantry out on a cavalry hunt. You can use this to keep those infantry occupied and possibly to exhaust them. If you can, you should also consider drawing that infantry into a trap.
I rarely use very many units of cavalry, but those applications have helped to win battles.
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