Linda Raschke – Tape Reading Trading Strategy
Last Updated on July 18, 2022
Linda Bradford Raschke is an American trader focused primarily on commodities and futures. She is the president of LBR Asset Management as well as LBR Group. She was the first woman to be interviewed by Jack Schwager in his Market Wizard series (New Market Wizards).
Linda has been involved in the financial markets since her early childhood. Her father was a trader — but not a successful one. She helped her father scan stock charts for patterns.
Linda Raschke’s early life and career
In her early 20s, she would hang out at the Pacific Stock Exchange, networking with traders and watching how the market moves. She began her career as a member of the Pacific Stock Exchange, trading on the Philadelphia Exchange, where she becomes a registered Commodity Trading Advisor. Later, she founded LBR Asset Management.
She has traded for several hedge funds and ran commercial hedging programs. She was acknowledged in Herera’s book, “Women of the Street”, and Jack Schwager’s book, “The New Market Wizards”. She has served as a board of directors with the Market Technicians Association for many years and has taught in over 30 countries.
Linda is well known for a book she co-authored with Laurence Connors: “Street Smarts High-probability Short Term Trading Strategies and Trading Sardines.”
Her attitude, work ethic, and interest drove her to develop the essential skills needed to become a successful trader. Her work ethic and passion are so strong that she didn’t stop trading through her last days of pregnancy.
She approaches the market from a top-down view, meaning she studies what happens in the lower timeframes and higher time frames to speculate on the following action. She emphasizes this approach because it is necessary to provide market context. She’s not a fan of trading the lower timeframe, as she says trading the five minutes time frame presents a lot of noise, “If I just came in and was doing nothing but look at a 5-minute S&P chart, I might recognize that the previous day was a huge range day and that today was going to be more of a rotation day. You’re going to trade a rotation-consolidation much differently than you’d trade a range expansion day… it puts it into context; I’m not going to be able to judge if it’s going to be a high to low day or low to high day with just a five-minute chart. I need to look at something like a 120-minute or a daily candlestick“, she added.
Linda usually prepares for the day’s trade in advance, before the day opens— after the day’s close. This, she maintains, allows her to enter the trade with an undisturbed judgment. She’s not overly analytical when trading; she likes to work with information as it comes in the present. She added that if she prepares for the trade on the day of, she’ll trade with an analytical mindset, which in most cases is not helping for her trading.
She has traded through all types of market conditions, including bull and bear markets, trendless markets, high and low volatility, trading pits, etc.
She retired in 2015 and currently focuses on her own private trading operation.
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Trading strategy quotes from Linda Raschke
We end the article with some quotes from Linda Raschke:
I believe my most important skill is an ability to perceive patterns in the market. I think this aptitude for pattern recognition is probably related to my heavy involvement with music.
You don’t have to be a rocket scientist to be a trader. In fact, some of the best traders whom I knew down on the floor were surf bums. Formal education didn’t really seem to have much to do with a person’s skill as a trader
I truly feel that I could give away all my secrets and it wouldn’t make any difference. Most people can’t control their emotions or follow a system. Also, most traders wouldn’t follow my system, even if I gave them step-by-step instructions, because my approach wouldn’t feel right to them.
Understand that learning the market can take years. Immerse yourself in the world of trading and give up everything else. Get as close to other successful traders as you can. Consider working for one for free.
I believe that only short-term price swings can be predicted with any precision. The accuracy of a prediction drops off dramatically, the more distant the forecast time. I’m a strong believer in chaos theory.
The third important ingredient for achieving peak performance is attitude. Attitude is how you deal with the inevitable adverse situations that occur in the markets.