LEARN FROM GENERALS OF THE MARKETS - PART 28
Linda Bradford Raschke (Commodity Trading Advisor) is the head of LBR Group Inc., and LBR Asset Management. This astute female trader has over 30 years of trading experience. A real amazon of the Wall Street as she’s, her career began in 1981 as a market maker in options. She first started at the Pacific Coast Stock Exchange, and later joined the Philadelphia Stock Exchange. She uses multiple-timeframe analyses when trading, as well as speculating on several markets with several trading methodologies. Apart from being featured in ‘The New Market Wizards’ (by Jack Schwager), she co-authored a best-seller titled: ‘Street Smarts—High Probability Short Term Trading Strategies’ (released in 1995); and the CNBC Financial reporter Sue Herera's Women of the Street, mentioned her as an exemplary trader. Linda has been featured in many financial programs and media. She’s also been useful for many acclaimed trading organizations, companies and conferences. During her over 3 decades of experience, she’s taught in more than 22 lands. For more information about Linda, please go to www.lbrgroup.com.
Lessons
During her lectures and presentations, Linda has passed across many lessons that are surely of help to traders. Some of them are below:
- Linda isn’t tempted to betray her time-tested trading style, no matter what the markets are doing. You simply need to learn how the markets behave and how they work so that you can achieve excellent trading mastery. Market patterns repeat themselves, and once you’ve mastered these, you can develop trading strategies which would no longer require major amendment. If you’ve a consistently profitable trading strategy (an edge), then stick to it. Be faithful to your trading method, even when there’s a period of roll-downs in the markets. Why? Trading strategies that work don’t change with market types or changing market conditions, nor are they market-specific. Market behavior tends to repeat itself and a winning streak is in the offing.
- You’ve got to love stops like your Mom. Setting protective stops when trading should be as automatic as breathing to you. The stop is an effective protection for your nerves and your accounts, no matter what others say against it. Stops will one day save you from the markets that refuse to come back – in contrast to your usual expectation. Never trade without them. It’s a foolish act to allow a trade that could be closed with a negligible loss snowball into a huge negativity.
- Linda uses different strategies to tackle the markets. There’s no strategy that’ll work in all market types. A trend-following system will fail in a continuously ranging market. A scalping strategy would go kaput in a strongly trending market, especially when caught in a wrong direction. A buy-and –hold strategy would be deadly in bear markets. The key to scaling through all these is to know the type of the market you’re trading and the type of the strategy you can use for it, or you can use a strategy that works in most (but not all) market conditions. When you’re frustrated with a trading methodology, that’s when the markets are about to become favorable to it.
- If you can trade with an edge, correct trading mindset and effective risk control tools, then consistent and permanent success is possible in the markets. Linda’s LBR Group has been a registered CTA since 1992, and has remained active till today. Moreover, her fund performances have been constantly ranked among the top 20 out of 4500 for best 5 year performances by BarclaysHedge. If Linda can do this, other women ought to do it, provided they’re ready to accept the truth about trading and move ahead. If a woman can achieve this, what are you man waiting for? Linda is a true amazon of the markets, just like Hetty Green and Louise Bedford.
- 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. If you lose your account through excessively big position sizes, what would you use to harvest gains in the markets when they start smiling at you? The best traders aren’t those who make money during easy market conditions and then lose the money when the market conditions become challenging. The best traders are those who can survive all uncertainties and adverse conditions in the markets, and then make money when the markets begin to pour out their riches for lovers of trading. The most important skill is not the ability to predict the market accurately, but the ability to survive losing streaks and keep your account intact; that’s risk control.
Conclusion: Don’t force yourself to do what’s contrary to the realities on the markets. Trade what you see, not what you want. As a trader, you’ve got to be objective and unbiased, rather than subjective and biased. Show respect for the markets.
This article is concluded with a quote from Linda Raschke:
“Successful traders who have demonstrated longevity in this business have one thing in common: a consistent methodology with a demonstrable edge. You cannot trade profitably over the long run without an edge.”
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