How is Linda Bradford Raschke investing, the market sorceress?

It does not use complicated techniques, and the models that 30 developed years ago have not changed until today. Linda Bradford Raschke in an interview with Jacek Lempart says: “My biggest short position in my entire career is 1200 contracts and I was immediately on the wrong side of the market. The loss was approximately $ 4 million. I assumed that I would do it in a month and I did it even faster ”.

Below, we describe the most interesting excerpts from an extremely inspiring and valuable interview about the investment Sorceress.

Who is LindaBradford Raschke

Linda Bradford Raschke

Linda was one of the heroines of the famous book by Jacek Schwager "Market Wizards" (Market Wizzards), in which the most effective traders of the world and their perspective on markets were presented. It has been investing since the 1981 year, it has run its own hedge fund, it has been considered a pensioner for several years, but it is still investing on its own account. Specializes in trade on the commodity market using futures contracts.

Technology enthusiast

“My approach is 100% technical, I am using the price. I attach some importance to the volume, but not that much. I get all the information from the price. And of course over time you become aware of the small seasonal differences, subtleties and behaviors, but basically that's it " - says Linda, who admits, however, that she creates market models.

If the price fits its model properly - for years written even by a programmer she hired. She claims she hasn't changed them in 30 years. And it applies them to every market, whether it is the S & P500, the Canadian dollar, and whether we are currently in a bearish or bullish period.

How long does it maintain open positions?

Linda does not necessarily believe in the foundation of day-trading speculation where one of the key success factors is to have an empty list of open positions at the end of the day. In her opinion, such a procedure is extremely ineffective and often causes us to close trades prematurely, before the move that generates the most profits. If you've traded this way, you probably know exactly what I'm talking about :-).

Trader explains:

“I like to trade during the day, but the money is mostly earned by holding the position after the day close. If you can get the idea right, it doesn't make sense to keep opening and closing positions just to show that the day ends with a profit in your pocket. Usually, however, I have a greater advantage of not closing a position before the day's end or opening it for the evening, holding it for 2 to 3 days.

He also warns against automatic systems too much trust. Even those that work in the beginning and bring a lot of money.

“However, I don't know a single trader who lives a high level of 100% mechanical trading. Well, I'll just lay my cards on the table: out of the multitude of traders I know, I don't know anyone who's been making coconuts for 5 to 10 years. " - it leaves no illusions.

This also translates into her approach to the future of markets. Linda Bradford Raschke does not deal with forecasting and predicting the direction in which prices will change in the long run. It also resembles one of George Soros' theories, which says that markets tend to go further than we think - both up and down. Remember how many times you closed your trade (as it turned out later) much too early?

4 million dollars loss, 4 million dollars profit

The biggest impression - not only on novice investors - in such stories always makes numbers. The trader does not pretend to be infallible and remembers her biggest slip-up. At the same time, however, he points out that there is no hopeless situation. Its biggest trade was size 1200 contracts. As it turned out, it was also her biggest failure, because the loss from this item amounted to as much as 4 millions of dollars (!). Interestingly, after this spectacular drama, she set herself an equally spectacular goal - to do it in a month. It was achieved even faster. Although the story of catching up quickly may not be a good demonstration for beginners of the market, it does demonstrate that if we learn from failures and know what to do, it is possible.

There was also an extremely important advice:

"That's why I say: if you make a mistake, you don't know what's going on, don't wait, just close your position!"

It even has a specially designed button on its platform that allows you to close all positions immediately. It is worth recalling that most platforms now have such a button even in the basic version. There are also options to close only profitable positions etc .. If you happen to pyramid trades, or trade several markets at the same time… make sure you have access to this functionality.

Tips for beginners

The investor calls herself a tech enthusiast and, when making decisions, is almost exclusively a price tag. However, it does not leave a dry thread on some tools and technical analysis techniques that are commonly used by retail traders. Is this a pike in the nose of trainers promising golden mountains and AT fanatics?

“Stay away from such nonsense as Fibonacci, Gann and all those predictions and proportions and nonsense! I mean, big money doesn't get paid that way! Who earns the big money and how? These people don't use Elliott wave theories or Fibonacci numbers. "

It also emphasizes that these are helpful tools at best to understand the structure of the market and "figuring out" how the price changes.

The trader draws attention to the basics that should be applied with iron consistency by novice traders. However, he warns against setting up defensive orders too closely (read more: How and when to move Stop Loss?) because there is a lot more hype on the market today than it used to be. A good trader, on the other hand, can distinguish between market noise and signal. The so-called "Ensiling" of losses is also extremely condemned by her. Shifting SL towards increasing failure? This is market suicide.

“What you have to learn is to get rid of your losses immediately and manage your risk really well. It is most important to survive in the market. The winning positions will do on their own. You need one big winning trade for every 10 to 20 trades. So you have a small profit, a small loss, a small profit, a small loss, but it is a cardinal and hard sin to grow a large loss! " - argues.

3 years of study - only then count on profits

Are you just starting out and after the first trades are you already calculating your future profits? Beginning traders often ask themselves "how much time does it take to start making money on the market?" Linda has her own answer. Attention, it can cool your enthusiasm. According to her, we cannot count on earning a fortune in the first year of trading. The key is patience.

"I have never met anyone who would lead a successful trading life without at least three years of study. It takes a lot of time and dedication " - ends.

The entire conversation can be found on the Smart Trader website