Linda Bradford Raschke
One characteristic that I truly aim to always embody in trading but also in life is to be a forever learner. That has served me very well in my trading career thus far, as I remain hungry for any and all new information and edge that will help refine me even more. As I am now finding success as a day trader, I swear, it makes me crave even more wisdom, guidance and habits that will serve the future wildly successful trader in me now. I want to understand as much as I possibly can so that I can maximize my ability to capitalize on what Miss Market abundantly offers every day. So, it is in pursuit of that goal that I (Market Mamas host Becky) am creating episodes periodically that highlight the best from the best in the trading industry. In this ‘Learning from Legends' series within the Market Mamas podcast, I am researching and offering up the best tips, words of wisdom and tangible gems from some of the world’s most epic traders. Today is the second episode in that series. And for it, I had to go with a total boss trader, the one and only Linda Bradford Raschke!
To get us started, I am going to lead with a killer quote from the chapter that featured Linda in the book The New Market Wizards, by Jack D. Schwager. (Get your copy today @ https://amzn.to/43gepzb) Ok, Linda said, “Perhaps my number one rule is don’t try to make a profit on a bad trade. Just try to find the best place to get out.” Ok my traders, there is so much we can love about this quote! It is a key component in strong risk management by not striving to turn a losing trade into profits, but rather just recognize that this trade went against you and thereby is no longer the setup you intended. So then, a very logical plan for managing it is to use patience and get out as it bounces back some to near your entry price, but don’t try to hold it for profit. When the trade pushes you into a loss, your #1 plan ought to be account preservation and shutting her down. Miss Market is abundant and there will always be new opportunities to capitalize on. Especially if we are not holding losers that are causing any sort of brain fog. Man, so, you guys see her knowledge already, right? Let me tell you more about this powerhouse trader so you can see and feel why she has lasted 45 years so far in this business!
Ok, so where did Linda Bradford Raschke come from? Well, her life in trading began in 1981 when she started as a floor trader in equity options on the Pacific Coast Stock Exchange in San Francisco. Later, she moved to and traded at the Philadelphia Stock Exchange. How she got her seat at the Pacific Coast Stock Exchange story is pretty cool though! She took a job after college that was just a few blocks from the exchange and had some time before work each day, so she literally just started hanging around there and meeting people. Asking questions, soaking up knowledge, building relationships, learning options, and realized that all types of people could do it - young, old, formally educated and not, all cultural backgrounds... And so when she got an offer to be backed for a seat on the floor or head off to business school, she was already hooked on trading and went for it! I just absolutely love that curiosity and openness to try at something so crazy intriguing but not at all guaranteed for success. I think that is a hallmark personality trait of successful traders - that faith in the potential and willingness to explore and learn!
As Linda has progressed through her trading career, she really has had a tremendous amount of experiences within this industry. In 1992, she became a registered Commodity Trading Advisor (CTA). Throughout the 1990s, Linda became the principal trader for several funds. In terms of written work, in 1995, she co-authored the book Street Smarts—High Probability Short Term Trading Strategies written with Laurence A. Connors, and in 2019, she published Trading Sardines: Lessons in the Market From a Lifelong Trader. Mama has put in some work to share her amassed knowledge with the world! In 2002, Linda started her own hedge fund, serving as the Commodity Pool Operator (CPO), which that hedge fund was later ranked among the top performers against thousands of other firms. From my research, as of 2015, Linda retired as a CPO and CTA but continues to trade daily for her own account. I mean, what a several decades long period of extensive experience and success - these are some powerful potential goals for all of us growing traders for sure!
As an early trader on the options exchange floor, it seems like that taught Linda so many crazy powerful early lessons. Reportedly, she took her largest loss in her young career at just age 22, during which she lost 80k in an options trade overnight and was immediately in a major hole. So, how did she manage that? In a quote from the The New Market Wizards book, in response to that loss, Linda said: “It wasn’t so bad emotionally because I had seen other traders around me lose much greater amounts in sudden take over situations. They were able to survive after taking hits of several million dollars. In comparison, my situation didn’t seem that extreme. Also I felt that in any business where you could lose money that quickly, you had to be able to make it back.” Such maturity, patience, and faith so early on - seems like freaking super power energy!
Furthermore, she then said: “Overcoming that experience gave me the confidence that I could overcome anything that might happen in the future.” This view makes a lot of sense to me at this point in my career. I have made money. And I have blown whole batches of accounts and felt pretty crappy about it. But honestly, with time, hindsight, and getting back into my groove of good trading - I too have felt that I can overcome anything, any loss. So long as I have risk management rules that I understand and respect diligently, then even a hard loss is just a temporary setback since I have built an edge and process as the day trader that I am. Which is honestly just so freaking cool!
In 1986, Linda had to move off the floor and to a home office to trade after a significant injury from a horse riding accident. But did that major transition in environment and trading style and vantage point derail her at all? From what I have read, she just kept right on thriving as a trader in her office! We have talked before on Market Mamas about the power of adaptability as a trader and this transition for her is a killer example of a trader choosing to embrace change for its fresh possibilities and holding steady with skill and edge through the change. After all, trading from a home office in the 1980s was quite a very different situation than it is today, goodness we have it so freaking easy comparatively! It is impressive for a trader as young as she was to recognize that adaptability and evolving with the markets and your own personal conditions is crucial for long-term success.
In terms of Linda’s well-known trading strategies and principles, she was predominately a day trader and short term swing trader, from what I have read, again, like me, so no wonder I love her vibe & career! She was quoted saying: “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.” Not all legendary traders I have studied are believers in chaos theory, but when you hear her explain why, I am definitely more on that side of things. Chaos theory in general revolves around the science of surprises, the nonlinear and the unpredictable. It holds that we should expect the unexpected. And to stay lighter on our feet and never stay too hung up on an outcome that could not truly be predicted. Now, I think this is true now just as much as ever because as day traders, random events happen in the world that can truly cause significant and unpredictable moves that really could harm our trades if we aren’t always planning in some way to be protected in such instances with a smart protective stop order!
Now in terms of her trade hold time, I imagine that has varied throughout her career. But when she was interviewed for The New Market Wizards book in 1992, she stated: “To me, the ideal trade lasts 10 days. But I approach every trade as if I’m only going to hold it for two or three days.” This, again, illustrates her flexibility with price action and non-attachment to a set outcome. Which seems like it would undoubtedly lead to less disappointment and more peace as a trader!
Also regarding trade management, Linda has said that “I’m also a firm believer in predicting price direction but not magnitude. I don’t set price targets. I get out when the market action tells me it’s time to get out, rather than based on any consideration on how far the price has gone. You have to be willing to take what the market gives you. If it doesn’t give you very much, you can’t hesitate to get out with a small profit.” This is so freaking wise! Holding for the moon when you’ve already taken the highest probability piece of a trade and are beginning to see signs of fatigue, or holding a trade even when there are multiple warning signs that it isn’t working are both really not sustainable choices for trade management.
Similarly, she also said, “Never be greedy. It's OK to leave money on the table. If you can’t get in at a favorable price, let the trade go and start looking for the next trade.” This peaceful and abundance based approach to trading has likely seriously served her as a trader. I know shifting to a similar outlook has been really great for me as a day trader - embracing the fact that I don’t need to take every trade or every swing. But rather trade when I have time to fully focus and the setup most clearly speaks to me. This is a recipe for profitability from my experience as well!
Ok, let’s talk about her overall view of how successful traders operate their trading businesses for a few minutes. The following are a few quotes from Linda that really outline her advice SO well! Here we go! "The good traders are the ones who can hold their ground the majority of the month and participate in that small handful of trades that are windfalls. The real skill is in not LOSING money!" Next quote reads: "The most important achievement you make as a trader is not to lose your account, NOT making profits. If you can be a breakeven trader, using that as your prime target, then it means you can recover any loss you'll inevitably sustain in your trading career. If you can keep your account safe, then you'll eventually make money in the markets." Ugh, so good! And one more from her on this specific topic is: "What you need to learn is to immediately cut your losers super short, and learn good risk management. The winners will take care of themselves. You just need one big winner of every 10 to 20 trades. The cardinal sin is never, never, never have a big loser!" Ok, so with all of these quotes from Linda Bradford Raschke, the key message is clear. Don’t lose your ass in any one trade or trading session, and you’ll be alright! And if that isn’t the complete truth!
Now, more on those damn losses that we all have to take as traders, as is the game we are operating within. Linda had furthermore been quoted saying: "Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable." And then also said: "Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker! Don't let ego and greed inhibit clear thinking and hard work." Goodness do I love these sentiments and views on the Ls and the wins! Aim for neutrality and process is what I read. As traders, wins and losses are our transactions. They are what a day will look like. We shouldn’t get too emotional on any of it, as it all is expected and we need to keep our eyes forward. Remain steady, stable, focused on our edge, and showing up for the continued effort to maintain and evolve our edge as appropriate. This is such an example to follow! It's this professionalism that sets traders apart from gamblers. And to me, this is such a major part of not giving into any emotional waterslides that could knock you out of business as usual mode.
Now this next quote from Linda that I have to share was something that I have most definitely learned the hard way! She said: "Beware of large positions that can control your emotions. Don't be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts." Thank goodness I am so much better at this now than I was in my first couple years as a trader!
These next two quotes have seriously and forever endeared me to Linda Bradford Raschke. First, she said: "You must believe in yourself and your judgment if you expect to make a living at this game." One trait that is organically woven through all of the content I have read and heard about and from her is a steady confidence in herself and her ability to succeed, as well as a strong self-awareness. I do think that is absolutely a key personality trait and life approach that takes a trader from struggling to legendary. If it isn’t innate in us, as it wasn’t for me, I do think we can purposefully cultivate increased confidence and personal faith with just showing up and putting in the work to learn and grow. And then the results follow that work. Confidence can be shored up slowly over time by showing up for ourselves in multiple ways and surrounding ourselves with people that feed the growth and abundant energy of it all. At least, this is how I am working through it all as I evolve into a consistently profitable trader myself.
One more powerful quote along these lines from Linda reads: "A loss never bothers me after I take it. I forget it overnight. But being wrong and not taking the loss - that is what does the damage to the pocket book and to the soul." This is a hard lesson that I think every trader will experience. I don’t know a single trader who hasn’t felt this exact lesson in their gut and soul.
Some of you may know, but Linda is also a skilled musician. She has said that her musical background helped her with pattern recognition, and that her discipline & concentration skills certainly crossed over on both those pursuits, which makes so much sense! She said: “I really value the fact that I have learned to trade as a craft. Like any craft, such as piano playing, perfection may be elusive, I’ll never play a piece perfectly, and I’ll never buy the low and sell the high. But consistency is achievable if you practice day in and day out.” Wise words. We have to show up and remain forever learners to really get so good! The generational wealth that trading can provide will not come easily. That’s just the reality. But with grit, determination, hard work and consistency every day, we can become proficient and really improve our outcomes!
In sticking with her musical analogies, she also has said: “In both music and trading, you do best when you are relaxed. And in both, you have to go with the flow.” I mean, I just love that! Mostly because I have experienced trading in a flow state, similar to a pianist or an athlete. Calm, patient, paying attention to my process, time frames, and live data, calm intentional breathing, and strong posture and easy heart rate. Recognizing information and assimilating that into my execution - when I am flowing with Miss Market, it can feel like the most beautiful dance and I can be quite handsomely rewarded when I am not chasing or fighting the current.
We don’t hear about women traders as often as men. It is improving over time and as more women are getting into trading, which I love! When author Jack D. Schwager asked Linda about women in trading in the book The New Market Wizards, she said: “In retrospect, I don’t think that being a woman has ever really hindered me. In fact, if anything it sometimes seemed that people made an extra effort to be helpful to me, perhaps because there are so few women traders.” I can totally see that as being so true. She went on to say: “Women may also have intrinsic advantages over men as traders. For example, women are less likely to use trading as an ego trip. They aren’t prone to making the macho type trade. Putting on a large position with the intent of feeling a sense of power and moving the market. Which I have seen lead to the financial ruin of a number of male traders.” It’s a fair point… Men and women have many subtle and not so subtle differences. But in trading, success is not about gender, it is about trading outcomes, and in that dept, Linda is a leading trader in any room!
When asked what advice Linda would offer to novice traders, one thing she said was: “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.” I like real talk. I’m sorry, not sorry, but it is very rare for traders to be great in just a year or two. You are a learner for years before any one of us really has a strong, solid but still flexible, repeatable system that can cross over multiple market conditions reliably. The work is required. For life changing financial outcomes, the work is required for many years. Surrounding yourself with strong mentors and traders I also feel is extremely beneficial to the required growth as well. I just love how honest she is with this advice.
One last killer quote from Linda Bradford Raschke that I have to give you, again from The New Market Wizards book is: “A trader is someone who does his own work, has his own game plan, and makes his own decisions. Only by acting and thinking independently, can a trader hope to know when a trade isn’t working out. If you ever find yourself tempted to seek someone else’s opinion on a trade, that’s usually a sure sign that you should get out of your position.” For me, I read this as we all should work our asses off to have an edge and trade it based on how we see and understand Miss Market. If a trade is making me nervous and I am considering phoning a friend to bounce it around before I decide how to manage it, then I no longer believe in my trade and it likely means that I need to cut it and move along. Miss Market is abundant and there will be so many more opportunities that likely will look and feel better, so go with that! And learn to trust your own instincts as you trade.
Linda Bradford Raschke is a legit trading legend. She has presented her research and lectured on trading for many globally recognized authorities, including: The Managed Futures Association, American Association of Professional Technical Analysts, International Federation of Technical Analysts, Market Technicians Association, and Bloomberg. She has taught professional and bank traders in over 22 different countries. Over the years, she has been featured in several financial publications, radio, and financial television programs. I am just so impressed with who she is as a trader and her impact on the industry over many years. At present, Linda is still a trader for her private operations - such an impressive life!
The goal of this Market Mamas episode was to provide an overview of Linda Bradford Raschke's life and trading wisdom, sharing my favorite valuable lessons and quotes for anyone interested in the world of trading. She is a phenomenal trader that I really appreciated learning more about for this episode/blog! I love trading and am completely dedicated to continual pursuit in this business for me. And I’m pretty into the opportunity hosting this podcast provides me as well. I believe we can help each other out and all pursue greatness together. There is tremendous power in a supportive community and I am so grateful to anyone who has read to the end of this episode blog and is still here and hence is allowing me the privilege of contributing to your trading support system. Please send me a comment (https://www.market-mamas.com/contact) if you are into this podcast series idea and have legendary traders that you would like to hear me cover in future episodes. Take care and happy trading!