EP 048: Trading a framework of your own, and using models to study price behavior w/ Linda Raschke

Aaron Fifield Podcast 2 Comments

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This week on the show I interviewed Linda Raschke โ€“ an active trader since 1981, when she started out on the floor of the Pacific Coast Stock Exchange as an options market maker.

In 1992, Jack Schwager interviewed Linda for his second installment of the Market Wizard series; The New Market Wizards.

Since then, Linda has traded for several hedge funds, and in 2002 she began one of her own โ€“ which has been ranked 17th out of 4,500 hedge funds for ‘Best 5 Year Performance’ by BarclaysHedge.

During this interview we covered some great topics, for example; adapting to environment changes, using models to study price behavior, and the part I really enjoyed was Linda’s advice to young traders towards the end. So please, make sure you pay close attention to this part.

“Your success is going to depend on your ability to concentrate.”

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Lessons learnt in this interview:

  • Adapting to environment changes; Linda speaks about her experience of trading multiple markets over her career โ€“ not by choice, but out of necessity.
  • Recognizing that you never stop learning, even after 35 years as a trader Linda continues to constantly learn and progress.
  • Linda stresses the importance of finding your own way, even has a floor trader in her early years, she very rarely took on advice from other participants.
  • With the notion that 80% of your profits are likely to come from 10% of your trades; Linda shares her objective of waiting for big money flow, and not forcing anything.
  • The first steps to becoming intimately familiar with a new market you have never previously traded.
  • Intuition and instinct โ€“ Linda explains whether or not these two factors have contributed to her success in anyway.
  • An overview of how to use models to study price behavior, and how Linda applies her findings into live trading scenarios.
  • What comes first, confidence or success? Do you become successful because you’re confident, or are you confident because you’re successful…
  • Linda passes on some very solid advice, targeted towards younger traders. Listen up!
  • Plus much more…

“You need to have a very consistent approach or framework, with which you deal with the market.”

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Links and resources mentioned:

  • LindaRaschke.net โ€“ Visit Linda’s website to learn more about her. While you’re there you’ll also find a great list of articles written by Linda, and the books she’s been featured in or recommends.
  • Linda on MoneyShow.com โ€“ Here’s a list of videos Linda has recorded for MoneyShow.com, topics ranging from ‘sticking to your plan’ to ‘stop management’ and more.
  • Day Type, Taylor Trading, Trade Location, More โ€“ Linda also mentioned she has done webinars for Big Mike Trading, this is one of them.
  • Volume/Price Relationship โ€“ …and here is the second one.

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