In the world of professional trading and money management, Linda Raschke stands out from the crowd for three factors (all of which should be priorities for any serious trader): Performance, Longevity and Consistency. She began her professional trading career in 1981 as a market maker in equity options. Although Raschke is probably known mostly as a short-term S&P 500 futures trader, she is active in several time frames, markets and trading styles. Raschke has been a full-time professional trader for over 30 years. Following is collection of 15 trading wisdoms that are not readily available, collected from different interviews that Linda Raschke did over her great carrier:
Linda Raschke trading wisdoms
You have to put behind you what happened yesterday If it was a good day, forget about it. If it was a bad day, forget about it.
Trading comes down to – simply not making mistakes. Everybody makes some mistakes, but you need to minimize your mistakes.
Don’t ever get discouraged, because every big trader out there has had challenging moments.
You have to be willing to sit there day after day, week after week, without having any huge successes right away.
Learn to trust yourself and have confidence in your own methods. A lot of people try to out-think the market. They try and intellectualize and try to get too smart.
Traders try to figure out all these scenarios. You shouldn’t think too much during the trading day. You should just watch and see what the market is doing. Don’t try to outsmart the market – or that is going to backfire on you.
If the market is not doing much, don’t try to force anything out of it. People don’t realize you don’t have to go out there and make money every single day.
If you can capitalize and put together three great days a month, you can make a good living – as long as you don’t do anything stupid on those other days. A lot of it is timing the market – watching it, getting a feel and waiting for your spot.
You learn on the trading floor that maybe 90% of your year might come in only three months. When things are really good, take advantage of them. We used to have an expression on the floor, ‘Take the cookies when they pass the plate around.’
We learned to think in terms of concepts. Are we testing yesterday’s high, or are we trading above yesterday’s close? Are we trading above today’s opening? Are we higher in the first hour? Is there a key swing high or swing low that the market is looking to take out or test?
You can sit there and play all kinds of little tricks with oscillators if you want. But any oscillator is going to highlight what’s there on the bar charts, anyway.
As a general rule of thumb, the more volatile a market is, the shorter the time frame you can trade it. The less volatility, the more you want to step out on your time horizon.
I figure there are people out there who are much bigger than I am and have much better resources and ability to interpret that type of information. They’re the ones making the market move. I’m just trying to follow the money flows.
You need to have some type of sport or discipline outside of the markets that you can try to improve on, so you can get your mind off the markets.
Except in unusual circumstances, get in the habit of taking your profit too soon. Don’t torment yourself if a trade continues winning without you. Chances are it won’t continue long. If it does, console yourself by thinking of all the times when liquidating early reserved gains that you would have otherwise lost.